Investment Income Performance Definition

Forex Glossary


The word investment income operation is utilized to spell out a step which enables analysts to comprehend the general speed of yield on a provider’s investment pursuits. This metric is utilized to ascertain the potency of the resources emerging provided that short-term investments on the balance sheet.


Investment Income Performance (percent ) = ((Dividend Income Interest Income) / / (Investments)) X100


  • Dividend and Interest Income will be listed on an accrual basis to get rid of the consequences of timing gaps.
  • Investments comprise the amount of most long and short-term income-producing securities and accounts like money market funds, in addition to bonds and stocks of different businesses.


Operating performance measures permit the investor-analyst to comprehend how well an organization is performing depending on earnings, gross profits, and profits. One of those techniques to gauge the efficacy of a organization’s investment portfolio would be by simply calculating their investment earnings functionality. This measure carries each the income derived from bonds and stocks of different programs, along with currency exchange balances, and divides the value by the sum total of their provider’s long and short-term investments.

To clear away the aftereffects of a timing gap, the interest and dividend values should be said in an accrual basis. That’s to say, here is actually the amount of money left from the current phase, even when the funds haven’t yet been received because of timing gap.

It needs to be mentioned that lots of business invest excess funds in relatively safe stocks, which will also offer low returns. Uncommonly significant levels of return indicate a business is going for a risky method with their investments. Along with examining the expenditure money performance of an organization, the investor-analyst also needs to inquire into the evaluations of those securities.


Company A’s balance sheet suggests that they’d a few million dollars of resources tied up in long and short-term investments. The notes Company A’s balance sheet and income statement supplies these insights to sources of non-operating source of income.

Investment Income
Bonds $2,500,000 $112,500
Common Stock $1,875,000 $65,600
Money Market Funds $625,000 $9,375
U.S. Treasury Bills $175,000 $5,250
Total $5,175,000 $192,725

From the aforementioned advice, the investor-analyst managed to compute Company A’s investment earnings functionality as:

= ($192,725 / $5,175,000) X100, or 3.72percent

This significance was then compared to other businesses at precisely the exact same industry to determine whether Company A’s operation was higher or lower than its peers.