标题: Operating Income - calculation method? [打印本页] 作者: segalm 时间: 2011-7-11 19:55 标题: Operating Income - calculation method?
Hi,
I have seen two ways to calculate operating income from Income Statement.
For example, firm A only has expenses items: COGS, SG&A Expenses, R&D Expenses and Depreciation Expenese in Income Statement.
Method #1: Sales - COGS - SG&A Expenses - R&D Expenses = Operating Income
Method #2: Sales - COGS - SG&A Expenses - R&D Expenses - Depreciation = Operating Income (Also is known as EBIT)
Do you know which method is appropriate according to CFAI material?
Thanks.作者: tobeornottobe 时间: 2011-7-11 19:55
Method #2 since operating profit = EBIT.
Depreciation is accounted for before operating profit because fixed assets are part of your core operations.作者: genuinecfa 时间: 2011-7-11 19:55
Think it depends.
If you are conducting credit analysis the correct method is Method #1.
See Reading 53, p.198作者: maryli 时间: 2011-7-11 19:55
Method 1 gives you core operating income.
Method 2 gives you operating income.作者: senlinlang 时间: 2011-7-11 19:55
perimel - you are correct.
Non-cash charges are not taken into account for the purposes of credit analysis - use EBITDA (method #1) in this case. For all others, method #2 will suffice.作者: stalkey 时间: 2011-7-11 19:55
This is one of the many "discrepancies" found in Level 2 and the only way to spot them is by practice or by luck!作者: Otabek 时间: 2011-7-11 19:55
Thanks for explanation. You guys really know more than I do!
