What is operating income? (2024)

FAQs

What is operating income? ›

Operating income—also called income from operations—takes a company's gross income, which is equivalent to total revenue minus COGS, and subtracts all operating expenses. A business's operating expenses are costs incurred from normal operating activities and include items such as office supplies and utilities.

Operating income refers to the adjusted revenue of a company after all expenses of operation and depreciation are subtracted. Expenses of operation or operating expenses are simply the costs incurred in order to keep the business running.

Operating income is a company's profit after deducting operating expenses such as cost of goods sold, wages and depreciation. Operating income = Gross income − Operating expenses. Operating income reflects the profitability of a company's core business and does not account for extraordinary income or expenses.

Operating revenue refers to the money a company generates from its primary business activities. It is often reported on the income statement, and you'll find it in the top-left of the balance sheet as well.

Operating income is a company's profit after deducting operating expenses which are the costs of running the day-to-day operations. Operating income, which is synonymous with operating profit, allows analysts and investors to drill down to see a company's operating performance by stripping out interest and taxes.

Operating income—also called income from operations—takes a company's gross income, which is equivalent to total revenue minus COGS, and subtracts all operating expenses. A business's operating expenses are costs incurred from normal operating activities and include items such as office supplies and utilities.

A general rule of thumb is that a good operating profit margin sits between 10–20%, meaning the business has a profit of 20 cents on each dollar of revenue after operating costs have been deducted. However, this can vary from industry to industry.

Key Takeaways. Non-operating income is the portion of an organization's income that is derived from activities not related to its core business operations. It can include dividend income, profits or losses from investments, as well as gains or losses incurred by foreign exchange and asset write-downs.

Operating Income Helps Confirm Profitability

Venture capitalists aren't necessarily looking for the next unicorn. However, they want their investments to be fruitful. Operating income takes an essential chunk of a company's income and spreads the numbers on the table for founders and investors to inspect.

Net operating income is revenue less all operating expenses while net income is revenue less all expenses, including operating expenses and non-operating expenses, such as taxes.

Is operating revenue the same as gross income? ›

Operating revenue is the total cash inflow from your primary income-generating activity. Operating income is the income you have after subtracting the costs of doing business. More specifically, operating income is calculated by subtracting operating expenses, depreciation and amortization from gross profit.

Operating income is your gross income minus operating expenses. You will not subtract interest and income taxes. And, you usually won't subtract extraordinary gains and losses. Synonyms for operating income include earnings before interest and taxes (EBIT), operating profit, recurring profit, and operating earnings.

Revenue reflects the total income before subtracting the cost of goods sold (COGS), salaries, and other expenses incurred to keep operations running. Meanwhile, operating income is the total amount earned after accounting for operating expenses like COGS, labor, administration, insurance, and other costs.

The formula to calculate a company's operating income is gross profit subtracted by operating expenses. Operating Income = Gross Profit – Operating Expenses. Each input of the operating profit formula can be found on the income statement.

Operating income is the profit generated by the company's core business operations, after expenses are subtracted. Those expenses include cost of goods sold (COGS) and selling, general and administrative (SG&A) expenses.

To calculate NOI, you add all revenue and then subtract operating expenses—typically expenses directly tied to property management, including real estate taxes, insurance, utilities, and maintenance.

Operating income measures the profitability of a company's core business operations after deducting all operating expenses. It shows how efficiently the company can generate cash from its business operations.

Operating income is a company's gross income less operating expenses and other business-related expenses, such as SG&A and depreciation. The key difference between EBIT and operating income is that EBIT includes non-operating income, non-operating expenses, and other income.

Synonyms for operating income include earnings before interest and taxes (EBIT), operating profit, recurring profit, and operating earnings.