NonoperatingIncomeExpenseNon-operating (income) loss is the net total of gains, losses, income, and expenses that come from activities outside a company's core business operations, such as investment gains, foreign exchange results, and income from securities. It sits between operating income and pretax income on the income statement.
The brackets around "Income" follow an expense-style sign convention: in this field, net non-operating income is shown as a negative number because it reduces the company's net costs, and a net non-operating loss is shown as a positive number.
Regulation S-X splits these items across two captions. Rule 5-03.7 covers non-operating income and asks companies to state separately, on the face of the statement or in a note, dividends, interest on securities, net profits on securities, and miscellaneous other income. Rule 5-03.9 covers non-operating expenses, including net losses on securities and miscellaneous income deductions. Material miscellaneous items must be described. Companies that report the combined total tag it in XBRL as NonoperatingIncomeExpense, which the SEC frames as income net of expense, the opposite sign from this field.
What counts as non-operating depends on the business. For an industrial company, gains on selling investments, currency remeasurement results, and the non-service components of pension cost are typically non-operating. For an investment firm or insurer, the same investment gains are core revenue. Whether interest is included also varies: S-X gives interest expense its own caption, so it is often excluded from the non-operating subtotal and shown separately, while interest income on securities is usually included.
Large non-operating results can make pretax income a poor guide to how the underlying business performed. Analysts often move from net income back to operating income to strip them out, or look at EBIT built from operating income rather than from net income. A company that consistently reports large non-operating gains deserves a closer read of the notes to see whether those gains are repeatable.
A: Interest and dividends on investments, gains on selling securities or businesses, favorable foreign exchange results, and certain pension income. For most companies, none of these come from selling their main products or services.
A: It is below operating income, but Regulation S-X gives it its own caption. Many companies show it on a separate line from other non-operating items, so check whether a given total includes it.
A: The field is labeled "(Income) Loss", so it is presented like an expense. Net income from non-operating activities reduces total costs and appears as a negative value.
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