What is One-Time Item?

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A one-time item is a gain, loss, or expense on the income statement that is nonrecurring in nature and therefore not considered part of a company's ongoing business operations. To get an accurate gauge of a company's operating performance, one-time items are usually excluded by analysts and investors while evaluating a company. Although many one-time items hurt earnings or profit, there are one-time items that add to earnings in the reporting period.

Definition

One-time items refer to gains, losses, or expenses that appear infrequently on the income statement and are not considered part of a company's ongoing business operations. Analysts and investors typically exclude one-time items when evaluating a company's performance to accurately assess its operational results. While many one-time items negatively impact earnings or profits, some can increase earnings during the reporting period.

Origin

The concept of one-time items originated from the need for financial statement analysis, particularly in the mid-20th century, as the complexity of corporate financial reporting increased. Investors and analysts required a clearer understanding of a company's core business performance, leading to the separation of financial impacts from regular operations and sporadic events.

Categories and Features

One-time items can be categorized into various types, including asset impairments, restructuring costs, legal settlement expenses, and natural disaster losses. These items are characterized by their non-recurring and unpredictable nature. They are typically excluded to provide a more accurate assessment of a company's operational performance.

Case Studies

A typical case is BP's massive fines and cleanup costs in 2015 due to the Gulf of Mexico oil spill, considered one-time items as they were not part of the company's regular operations. Another example is General Electric's significant restructuring costs in 2018, which were treated as one-time items to more accurately reflect the company's ongoing operational capacity.

Common Issues

Investors often misunderstand the impact of one-time items, assuming they are always negative. In reality, one-time items can also be positive, such as unexpected gains from asset sales. Ignoring one-time items can lead to misjudging a company's profitability.

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Lisbon Treaty

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Labor Intensive

The term "labor-intensive" refers to a process or industry that requires a large amount of labor to produce its goods or services. The degree of labor intensity is typically measured in proportion to the amount of capital required to produce the goods or services: the higher the proportion of labor costs required, the more labor-intensive the business.

Labor Intensive

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Fast-Moving Consumer Goods

Fast-moving consumer goods (FMCGs) are products that sell quickly at relatively low cost. FMCGs have a short shelf life because of high consumer demand (e.g., soft drinks and confections) or because they are perishable (e.g., meat, dairy products, and baked goods).They are bought often, consumed rapidly, priced low, and sold in large quantities. They also have a high turnover on store shelves. The largest FMCG companies by revenue are among the best known, such as Nestle SA. (NSRGY) ($99.32 billion in 2023 earnings) and PepsiCo Inc. (PEP) ($91.47 billion). From the 1980s up to the early 2010s, the FMCG sector was a paradigm of stable and impressive growth; annual revenue was consistently around 9% in the first decade of this century, with returns on invested capital (ROIC) at 22%.

Fast-Moving Consumer Goods

Fast-moving consumer goods (FMCGs) are products that sell quickly at relatively low cost. FMCGs have a short shelf life because of high consumer demand (e.g., soft drinks and confections) or because they are perishable (e.g., meat, dairy products, and baked goods).They are bought often, consumed rapidly, priced low, and sold in large quantities. They also have a high turnover on store shelves. The largest FMCG companies by revenue are among the best known, such as Nestle SA. (NSRGY) ($99.32 billion in 2023 earnings) and PepsiCo Inc. (PEP) ($91.47 billion). From the 1980s up to the early 2010s, the FMCG sector was a paradigm of stable and impressive growth; annual revenue was consistently around 9% in the first decade of this century, with returns on invested capital (ROIC) at 22%.

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Negotiable Instruments

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Renewable Resource

A renewable resource is a resource that can be replenished naturally over time. As a result, it is sustainable despite its consumption by humankind.Renewable resources for the production of energy are considered especially important for their potential to replace non-renewable, or finite, resources. Additionally, renewable resources can offer cleaner energy solutions than those provided by non-renewable resources such as coal and fossil fuels.Examples of renewable resources include the sun, wind, water, the earth's heat (geothermal), and biomass.

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Feasibility Study

A feasibility study is a detailed analysis that considers all of the critical aspects of a proposed project in order to determine the likelihood of it succeeding.Success in business may be defined primarily by return on investment, meaning that the project will generate enough profit to justify the investment. However, many other important factors may be identified on the plus or minus side, such as community reaction and environmental impact.Although feasibility studies can help project managers determine the risk and return of pursuing a plan of action, several steps should be considered before moving forward.