← Business Metric: Financial (all topics)
Exceptional items to PBT
What it is
Items reported as exceptional, one-off or non-recurring, measured against profit before tax. It tests how much of the reported result comes from items management has asked investors to disregard
Recurring exceptional items are a contradiction and a warning
Impact on industries
- Repeated exceptional charges usually indicate that the item is a normal cost of the business being presented as extraordinary
- Gains are more often left in the headline while losses are excluded, so the treatment is frequently asymmetric
- Where genuinely one-off, separating the item gives a cleaner view of underlying performance and is exactly what disclosure should achieve
- The test is the multi-year pattern - an exceptional item in one year is credible, one in five consecutive years is not