Other Operating Income/Operating Income (%) | Accounting Ratio (2024)

Other operating income includes revenue from all other operating activities which are not related to the principal activities of the company, such as gains/losses from disposals, interest income, dividend income, etc.

We are concerned with companies that have high levels of other operating income relative to their industry peers as it suggest that earnings are of relatively low quality. For example, some companies consistently meet earnings expectations by generating asset disposals. We would argue that this is not a recurring income source and should be discounted. However, some business models generate higher levels of other operating income than others. For example, retail companies might generate recurring rental income or discounts from suppliers which appears as other income. Indeed, retailers tend to generate other operating income in excess of 14% of total operating income, as shown in Figure 69. Only 22% of the 16.000 companies in our Bloomberg sample reported other operating income; the median average equated to 10% of operating income.