FRMO (FRMO) Operating Income : $5.92 Mil (TTM As of May. 2014)

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What is FRMO Operating Income?

FRMO's Operating Income for the six months ended in May. 2014 was $5.92 Mil. Its Operating Income for the trailing twelve months (TTM) ended in May. 2014 was $5.92 Mil.

Operating Margin % is calculated as Operating Income divided by its Revenue. FRMO's Operating Income for the six months ended in May. 2014 was $5.92 Mil. FRMO's Revenue for the six months ended in May. 2014 was $6.39 Mil. Therefore, FRMO's Operating Margin % for the quarter that ended in May. 2014 was 92.64%.

FRMO's 5-Year average Growth Rate for Operating Margin % was 0.00% per year.

Operating Income or EBIT is linked to Return on Capital for both regular definition and Joel Greenblatt's definition. FRMO's annualized ROC % for the quarter that ended in May. 2014 was 10.69%. FRMO's annualized ROC (Joel Greenblatt) % for the quarter that ended in May. 2014 was %.

FRMO Operating Income Historical Data

The historical data trend for FRMO's Operating Income can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

* Premium members only.

FRMO Operating Income Chart

FRMO Annual Data

Trend

Feb00

Feb01

Feb02

Feb03

Feb04

May12

May13

May14

Operating Income

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0.05

0.10

3.50

14.38

5.92

FRMO Semi-Annual Data
	Feb00	Feb01	Feb02	Feb03	Feb04	May12	May13	May14
Operating Income	Get a 7-Day Free Trial			0.05	0.10	3.50	14.38	5.92

FRMO Operating Income Calculation

Operating Income, is the profit a company earned through operations. All expenses, including cash expenses such as cost of goods sold (COGS), research & development, wages, and non-cash expenses, such as depreciation, depletion and amortization, have been deducted from the sales.

For stock reported annually, GuruFocus uses latest annual data as the TTM data. Operating Income for the trailing twelve months (TTM) ended in May. 2014 was $5.92 Mil.

FRMO (OTCPK:FRMO) Operating Income Explanation

1. Operating Income or EBIT is linked to Return on Capital for both regular definition and Joel Greenblatt's definition.

FRMO's annualized ROC % for the quarter that ended in May. 2014 is calculated as:

	ROC % (Q: May. 2014 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: May. 2013 )	+	Invested Capital (Q: May. 2014 ))	/ count )
=	5.916 * ( 1 - 42% )	/	( (29.552	+	34.649)	/ 2 )
=	3.43128	/	32.1005
=	10.69 %

where

	Invested Capital		(Q: May. 2013 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Cash, Cash Equivalents, Marketable Securities	-	max(0, Total Current Liabilities	-	Total Current Assets	+	Cash, Cash Equivalents, Marketable Securities	))
=	96.017	-	0.172	-	( 73.831	-	max(0, 8.412	-	74.705	+	73.831	))
=	29.552

	Invested Capital		(Q: May. 2014 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Cash, Cash Equivalents, Marketable Securities	-	max(0, Total Current Liabilities	-	Total Current Assets	+	Cash, Cash Equivalents, Marketable Securities	))
=	110.445	-	1.43	-	( 85.927	-	max(0, 12.156	-	86.522	+	85.927	))
=	34.649

Note: The Operating Income data used here is one times the annual (May. 2014) data.

2. Joel Greenblatt's definition of Return on Capital:

FRMO's annualized ROC (Joel Greenblatt) % for the quarter that ended in May. 2014 is calculated as:

	ROC (Joel Greenblatt) %		(Q: May. 2014 )
=	EBIT	/	Average of (Net fixed Assets	+	Net Working Capital)
=	EBIT	/	Average of (Property, Plant and Equipment	+	Net Working Capital)
			Q: May. 2013		Q: May. 2014
=	EBIT	/	( ( (Property, Plant and Equipment + Net Working Capital)	+	(Property, Plant and Equipment + Net Working Capital) )	/	count )
=	5.916	/	( ( (0 + max(-7.538, 0))	+	(0 + max(-11.561, 0)) )	/	2 )
=	5.916	/	( ( 0	+	0 )	/	2 )
=	5.916	/	0
=	%

where Working Capital is:

	Working Capital		(Q: May. 2013 )
=	(Accounts Receivable	+	Total Inventories	+	Other Current Assets)	-	(Accounts Payable & Accrued Expense	+	Defer. Rev.	+	Other Current Liabilities)
=	(0.476	+	0	+	0.398)	-	(0.172	+	5.852	+	2.388)
=	-7.538

	Working Capital		(Q: May. 2014 )
=	(Accounts Receivable	+	Total Inventories	+	Other Current Assets)	-	(Accounts Payable & Accrued Expense	+	Defer. Rev.	+	Other Current Liabilities)
=	(0.595	+	0	+	0)	-	(1.43	+	9.016	+	1.71)
=	-11.561

When net working capital is negative, 0 is used.

Note: The EBIT data used here is one times the annual (May. 2014) EBIT data.

3. Operating Income is also linked to Operating Margin %:

FRMO's Operating Margin % for the quarter that ended in May. 2014 is calculated as:

Operating Margin %	=	Operating Income (Q: May. 2014 )	/	Revenue (Q: May. 2014 )
	=	5.916	/	6.386
	=	92.64 %

4. Please click Growth Rate Calculation Example (GuruFocus) to see how GuruFocus calculates Wal-Mart Stores Inc (WMT)'s revenue growth rate. You can apply the same method to get the Operating Income growth rate using Operating Income per share data.

Be Aware

Compared with a company's EBITDA margin, Operating Margin can be manipulated by adjusting the rate of depreciation, depletion and amortization (DDA).

If a company is facing competition, its Operating Margin may decline. Often the Operating Margin declines well before the company's revenue or even profit decline. Therefore, Operating Margin is a very important indicator of whether the company is facing problems.

For instance, by 2012, Nokia (NOK)'s problems were well known and its stock had lost more than 90% of its market value since 2007. But Nokia's Operating Margin had already been in decline since 2002, although its earnings per share were still rising. Investors who paid attention to Operating Margin would have avoided this huge loss. The same can be said for Research-in-Motion (RIMM).

Therefore, Operating Margin is a very important screening filter for GuruFocus. GuruFocus's Buffett-Munger screener requires that the profit margin is either consistent or expanding. The Model Portfolio of the Buffett-Munger screener has outperformed the market every year since inception in 2009.

FRMO Operating Income Related Terms

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FRMO (FRMO) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Financial Services » Asset Management » FRMO Corp (OTCPK:FRMO) » Definitions » Operating Income

Comparable Companies

Traded in Other Exchanges

N/A

Address

1 North Lexington Avenue, Suite 12C, White Plains, NY, USA, 10601

Website

https://www.frmocorp.com

FRMO Corp is focused its activities on making strategic investments in public and private companies.

Executives

Steven Bregman	director, 10 percent owner, officer: President	HORIZON KINETICS LLC, 470 PARK AVENUE SOUTH, 4TH FLOOR SOUTH, NEW YORK NY 10016
Santa Monica Partners Lp	director	1865 PALMER AVENUE, LARCHMONT NY 10538
Lawrence J Goldstein	director	1865 PALMER AVE 108, LARCHMONT NY 10538
Jay P Hirschson	director	747 GREENWICH ST, SUITE 400, NEW YORK NY 10014
Murray Stahl	director, 10 percent owner, officer: CEO	C/O HORIZON KINETICS LLC, 470 PARK AVE S 8TH FL S, NEW YORK NY 10016
Peter Doyle	director, 10 percent owner, officer: Vice President, other: Secretary	470 PARK AVENUE SOUTH, 8TH FLOOR, NEW YORK NY 10016
Lester J Tanner	director, officer: Secretary	100 PARK AVENUE SUITE 3302, NEW YORK NY 10017
Allan Kornfeld	director	123 WILD DUNES WAY, JACKSON NJ 08527