Financial Reporting

Operating vs Non-Operating Analysis Template

Separate operating results from non-operating items. Identify impact of one-time, unusual, or non-recurring items on reported earnings.

How to use this template

1

Define operating activities

Identify which items are core operating results: sales, cost of goods sold, operating expenses directly supporting revenue generation.

2

Identify non-operating items

List non-operating items: interest expense, investment income, gains/losses on asset sales, one-time charges, acquisition costs, restructuring.

3

Calculate operating income

Compute operating income before financing and investment decisions. Compare to reported net income.

4

Quantify impact of non-operating items

Calculate total impact of non-operating items on net income. Express as percentage of operating income and absolute amount.

5

Analyze trends and sustainability

Assess whether non-operating items are recurring or one-time. Discuss sustainability of operating income independent of one-time items.

Why use this template

  • Shows true operating performance independent of financing and investment decisions
  • Identifies quality and sustainability of earnings
  • Highlights one-time items that don't recur
  • Enables better comparison of performance to prior periods and competitors

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