This profit is not only affected by the company's operation, but also by many external forces, such as the government's fiscal and taxation policies, natural disasters and man-made disasters. If you want to know the company's operating ability, non-operating income and expenditure are really not counted, but non-operating income and expenditure are still part of investors' investment income. If it doesn't count, it violates the principle of calculating the price-earnings ratio.
If only operating profit is used as the calculation basis of P/E ratio, then investors will ignore the regulatory role of the government in corporate profits. For example, many emerging industries, because the market is immature, but in order to encourage the development of these industries, the state will subsidize enterprises and encourage investors to continue to develop in this industry. If this income is ignored, then government taxation will lose its meaning; It is a guide to investment and a means to balance economic development for the government to subsidize those promising but immature emerging enterprises with profits from unsuitable, high-pollution and high-energy-consuming enterprises.
For another example, in extraordinary times, such as war, the government will raise the tax rate of enterprises (the corporate income tax rate in the United States during World War II was as high as 94%). Although enterprises can get a lot of operating profits, after deducting huge taxes, the profits attributable to shareholders will also shrink sharply. You can't count the profits of an enterprise as your own before paying taxes.
For another example, for unpredictable events outside the business, the management of the company should also consider avoiding these risks, and cannot pin the company's revenue and expenditure on "random events"; For example, the fire in a chemical plant is indeed a loss outside the business, but has the management done its own disaster prevention work? There are also some companies in cyclical industries. In order to lock in the prices of raw materials and products, enterprises may use financial derivatives, such as futures or swap contracts. The profits and losses arising from these contracts are indeed outside the business scope, but they are also related to the management's vision and timing. In recent years, many state-owned enterprises have entered the financial derivatives market in a big way without experience, and even dared to "gamble" with major international investment banks without understanding the principles, and finally suffered a fiasco. Investors in these areas should also consider it.