Operating Income

What is Operating Income?

Operating Income, also known as operating profit or operating earnings, is an accounting figure that measures the profit earned from a company's core business operations. It is calculated by subtracting operating expenses, such as wages, depreciation, and cost of goods sold (COGS), from the gross income. Operating Income does not include income from investment or secondary activities, and it excludes taxes and interest expenses.

Short Description: The profit realized from a business's core operations, excluding deductions of interest and taxes.

• Gross Income: Total revenue before any deductions are made.
• Operating Expenses: Costs necessary to maintain the production and operation activities of a business.
• Exclusions: Interests, taxes, and non-operating income are not considered in operating income calculations.

Operating Income is a key indicator of a company's operational efficiency, offering insight into how well a company manages its core activities without the influence of its financing and external market effects.