CFAI Mock AM - Operating Income sales, always, income, should

dotamasta

For q14, operating income = sales - cogs- sg&a - r&d
In exhibit 2 of the vignette for q’s 31-36, operating income deducts depreciation.
I always thought depr. should be deducted to arrive at operating income. Which way is right?

SeanWest

I haven’t worked the mock yet but, depr is an operating expense so it should be deducted to reach EBIT.

BelalM

Ya this tripped me up too, can anyone clarify?

Windjam

Agreed I used ebit as operating income but still chose c due to ltd ratio having more to do with credit worthiness than oi/sales. I always thought oi= ebit but I guess not

kkn006

Yeah I still got the q right but I was just asking for clarification of the definition. I’m still going to assume op profit = EBIT. That’s pretty much the definition everywhere else.

soverby

I had the exact same question, but forgot to post it.
Gotta go with EBIT = operating income
The new equity/private equity section helps, too.
S - cogs = GP
GP - SGA = pro forma EBITDA
pro forma EBITDA - depreciation = EBIT!