CFAI Mock AM - Operating Income always, should, income

IAmNeil

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?

Kapie

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

Otabek

Ya this tripped me up too, can anyone clarify?

luda002

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

sameeragarwal

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.