ninja1024

Thecodont Wrote:
-------------------------------------------------------
> No that is wrong. CFAI clearly states that
> operating income is EBIT.
>
> "Operating income reflects the a company's profits
> from its usual business activities, before
> deducting interest expenses or taxes"
>
> Source is CFAI 2008 FSA Volume 3 level 1 page 13
>
>
> Because of what people tell you on the
> forum...they often as as confused as you...that
> goes for me too!

Sorry bro, but you are actually wrong. The CFAI never ever states that operating income and EBIT are the same thing. (Find that in the text) They do use the two terms interchangeably throughout the text. If a company had no non-ordinary items then yes, EBIT and Operating Income would be the same, but that is rarely the case.

"Operating income reflects the a company's profits from its usual business activities, before deducting interest expenses or taxes"

Note the key word USUAL. Operating Income/Profit only includes USUAL business income and expenses. EBIT is one line down and includes unusual/non-ordinary gains or expenses. Maybe you should have a little more faith in the forum.



Edited 2 time(s). Last edit at Wednesday, May 25, 2011 at 08:47PM by Chuckrox8.