Definition
Other Comprehensive Income (OCI)
Other Comprehensive Income captures gains and losses that bypass the profit and loss account and are recognised directly in equity under Ind AS.
Certain items are recorded in OCI rather than net profit, such as remeasurements of defined-benefit pension plans, fair-value changes on certain investments, and some foreign-currency translation and hedging gains. Total comprehensive income equals net profit plus OCI.
OCI exists because some unrealised gains and losses would make reported profit too volatile or are not yet realised. Analysts review OCI to understand the full change in equity, since large OCI movements, for example on AFS investments, can affect a company's or bank's net worth even though they skip the P&L.
Related terms
- Available for Sale (AFS)Available for Sale is the bank investment category for securities not held to maturity or for active trading, which are marked to market with changes routed through reserves.
- Profit and Loss StatementThe profit and loss statement, or income statement, reports a company's revenues, expenses and resulting profit or loss over a period.
- Shareholders' EquityShareholders' equity is the residual interest in a company's assets after deducting liabilities, comprising share capital, reserves and retained earnings.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.