For startups, AOI goes beyond traditional operating income by removing the noise of irregular expenses or gains that don’t reflect day-to-day business operations. Allowable adjustments might include costs such as one-time product launch expenses, non-recurring R&D expenditures during a pivotal innovation phase, or extraordinary legal fees for patent filings. Additionally, startups may adjust for relocation expenses incurred during a strategic office move, one-off restructuring costs associated with pivoting the business model, or significant fundraising expenses that are not expected to repeat in future periods. By excluding these unusual items, AOI offers investors and management a more accurate look at the startup’s adjusted current earnings, which is vital for assessing long-term growth potential and operational efficiency.
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