These occurrences should be recognized for what they are and judged accordingly. They are in no way indicative of the outlook for future earnings.
A one-time sale of assets tends to make overall corporate profits look better in the year it occurs. Yet the sale decreases the total assets of the company. There is no real gain.
In an established, well-managed company, daily operations finance themselves with cyclical shortfalls covered by short-term borrowing, so never should a one-time gain be used to cover ordinary expenses.
There is no real gain from the one-time sale of assets unless the money is used for one of the following:
- Restore the asset base
- Reduce debt
- Contribute substantially to future earnings.