Non-recurring items included in EBIT

How to input non-recurring items that are included in EBIT?

In Valuatum Excel Model there is a row called “Non-recurring items included in EBIT” after the EBIT (operating profit) section (both in estimates and cumulative section). This row is for sorting out the non-recurring items included in EBIT. If there are some non-recurring items included in EBIT, they should be put here as well. Note that these items have to be included also in EBIT and should not be removed from EBIT when put here. This row just informs which items in EBIT are non-recurring items. The figures put on this row are not added to the EBIT. When the non-recurring items in EBIT are also put here, they will be excluded in some figures of the analysis.

Perhaps the best solution would be also to have own division for the non-recurring items in EBIT. Then investors can see the NRIs also in the divisions. Anyway you should mark the NRIs also to the non-recurring items in EBIT.

Why input non-recurring items correctly?

There is a clear need to exclude non-recurring items from EBIT. The analysis will give a better picture of how the core business of the company is doing. Usually investors are more interested in how the normal core business is doing than e.g. if there are some sales profits. Now everyone can choose whether they follow the adjusted figures (which exclude NRI) or the reported, unadjusted figures. At the same time you can show the operating profit as the company reports it, and the customers can see how much operating profit includes non-recurring items. Also some key figures (like EPS) can be calculated using adjusted EBIT. Therefore we recommend that all the non-recurring items are inputted correctly in the Valuatum Model.