Finance
What is Operating income?
Operating income is the profit a company makes from its core business operations, before interest and taxes. It's revenue minus operating costs (like wages, materials, and rent) — a clean measure of how profitable the actual business is.
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Watch a 2-minute lesson with voice + animation that explains operating income.
Key things to understand
- 1It's profit from core operations, before interest and tax.
- 2Revenue minus operating expenses.
- 3It excludes one-off and financing items.
- 4It shows how profitable the core business is.
Frequently asked questions
- What is operating income?
- A company's profit from its core operations, calculated as revenue minus operating expenses, before interest and taxes.
- What's the difference between operating income and net income?
- Operating income excludes interest and taxes; net income is the final profit after everything is deducted.
- Why does operating income matter?
- It isolates how well the core business performs, separate from financing and tax effects.