Operating Income
The profit earned from normal business operations before interest and taxes, also called operating profit, measuring core operational performance.
Operating Income
The profit a company generates from its normal business operations before accounting for interest and taxes, calculated by subtracting operating expenses from gross profit.
For instance, a manufacturing company might report quarterly gross profit of $3 million and operating expenses of $2.1 million, resulting in operating income of $900,000 or 15% of revenue, which measures performance before considering financing costs and tax obligations.
Operating income, also called operating profit or earnings before interest and taxes (EBIT), focuses exclusively on the results of core business activities, excluding financing decisions and tax situations. This metric helps investors and analysts evaluate management’s effectiveness at generating profits from regular operations, facilitating comparisons between companies with different capital structures, interest obligations, or tax circumstances.