Non-Operating Expense

Definition

A non-operating expense is a cost that does not directly arise from a company's core business operations. Non-operating expenses must be reported separately from operating expenses so that stakeholders get a clear view of the company's financial performance.

Example

Interest payments on borrowings, legal fees, inventory write-offs, etc.

Why it matters

Although Non-operating expenses are reported at the bottom of a company's income statement, the method of reporting does not undermine its importance. Investors and analysts do focus on this expense component as it can have a potential impact on the company's financial performance.

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