I'm reading the income statement of a company, and the column describing profit is titled Profit from operations before non-trading and capital items. So, my question is a two-parter:

  1. What is a non-trading item?
  2. What is a capital item?

The Profit from operation is what the company makes during a normal course of year and is a good indicator of how good [or bad] its performing.

The non-trading items are one-off expense or earning that are not periodic in nature; for example payoff on a litigation.

The Capital item is a long term expense incurred [say purchase of new machinary / equipement] that would be amortized over a period of time and cannot be treated as expense in one particular year. It can also be items like sale of a property reulting in profits.

Such items at times hide the actual profitability of the company and hence as an accounting practise they are always listed seperately.

protected by Chris W. Rea Feb 9 '17 at 15:11

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