Financial Statement Review and Ratio Analysis(#2 in series)
Q: For "Adjustments – Other One Time (Income) / Expenses" for 2013, why wasn't “Other Income” of $5,855 taken into consideration?
A: We made the assumption that the $71,972 “Other Expense” in 2012 was associated with the legal settlement of $43,378 in 2013 and was, therefore, non-recurring. According, we removed those amounts from 2012 and 2013 in arriving at Business Profit.
The $5,885 of "Other Income" in 2013 appears to be a recurring event. Although there was no “Other Income” in 2012, Total Coverage, Inc. reported $6,937 of "Other Income" in 2011. Therefore, we have no reason to believe that "Other Income" would not be recurring. Although we don't know for sure, we would ask management if this were a live deal. Since it is minor amount in this case, we left "Other Income" as recurring.
Course overview: Financial Statement Review and Ratio Analysis