And dividend revenue investment gains and losses

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and dividend revenue Investment gains and losses Total nonoperating expenses Income from continuing operations before taxes Tax expense Income from continuing operations Income (loss) from discontinued operations, net of tax (see Appendix 3A) Consolidated net income Less: consolidated net income attributable to noncontroliing interest (see Appendix 3A) Consolidated net income attributable to parent shareholders Operating activities are those that relate to bringing a company's products or services to market and any after-sales support. The income statement in Exhibit 3.1 reflects operating activi- ties through revenues, costs of goods sold (COGS), and other expenses. Selling, general, and administrative expense (SG&A) includes wages, advertising, occupancy, insurance, research and development, depreciation, and many other operating expenses the company incurs in the BUSINESS INSIGHT Which Net Income and Stockholders' Equity to Use? Many companies have two sets of shareholders: those that own the common stock of the parent company (the company whose financial statements we review) and those that own shares in one or more of the parent company's subsidiaries (called "noncontrolling interest"). Current accounting standards require companies to identify the stockholders' equity relating to each group of share- holders and, likewise, the net income that is attributable to each. ROE is usually computed from the perspective of the parent's shareholders and, thus, the numerator is the net income that is attribut- able to the parent's shareholders and the denominator is the stockholders' equity of the parent's shareholders. We illustrate this difference for Walmart in our Mid-Module Review and discuss noncontrolling interests more fully in Module 9.
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Module 3 I Profitability Analysis and Interpretation 3-6 inary course of business (some of these are often reported as separate line items in the income sratement). Companies also dispose of operating assets, and can realize gains or losses from ir disposal, or write them off partially or completely when they become impaired. These, too, operating activities. Finally, the reported tax expense on the income statement reflects both rating and nonoperating activities. Later in this section we use Target's income statement to explain how to separately estimate tax expense related to operating activities only. Nonoperating activities relate to borrowed money that creates interest expense. Nonoperating ivities also relate to investments such as marketable securities and other investments that yield rerest or dividend revenue and capital gains or losses from any sales of nonoperating invest- nts during the period. Often companies report income or loss from discontinued operations; ich we consider as a nonoperating item on the income statement. ROE analysis is from the pective of parent-company shareholders; thus, we also consider the portion of consolidated income that is attributable to noncontrolling shareholders as a nonoperating item on the me statement (but excluded from the tax shield defined below).
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