# Other Income Quality

_Corporate Finance . 2026-06-25 . By Tanmay Kurtkoti. Educational, illustrative, not advice._

A friend forwarded me a results screenshot last week, genuinely thrilled. Profit up 18 percent. Big green number. I asked him to do one thing before celebrating: scroll down to the line called other income.

Here is what that line does. A company's profit is not one number, it is two stories stacked on top of each other. There is the profit from the actual business, the part that makes and sells things. And there is other income: interest on cash sitting in the bank, dividends, gains from selling an asset or parking money in the market. Schedule III of the Companies Act keeps them on separate lines for exactly this reason.

So we split his screenshot. The core business profit had gone from 120 to 110. It shrank, roughly 8 percent. But other income had jumped from 50 to 90, and its share of pre-tax profit climbed from 29 percent to 45 percent. The reported number rose from 170 to 200 and looked like growth. Almost half of it came from the cash pile, not the product.

That is not fraud. It is not even unusual. Plenty of good companies sit on cash and earn interest on it. The problem is reading the bottom line as if every rupee in it came from the business getting better at its job.

Two things I keep in mind. A one-off asset sale is not next year's profit. And interest on a cash pile is not the business you are paying for. Both land in the same bank account. Only one of them tells you the company is improving.

You are buying the factory, not the fixed deposit. Read the line that tells you which one is actually making the money.

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