Operating income
Financial Accounting glossary · Financial Statement Analysis & Ratios
Definition
Earnings from primary business operations: revenue - COGS - operating expenses; excludes interest, taxes, and non-operating items.
Operating income in plain English
Operating income shows how much money a company makes from its core, everyday business — before side stuff clouds the picture. You start with sales, subtract what the products cost to make (COGS) and the normal costs of running the place like rent and salaries, but you leave OUT loan interest, taxes, and random one-off events. It answers a clean question: is the actual business itself profitable, ignoring how it's financed or taxed? — like judging a restaurant purely on its food sales and kitchen costs, not on its bank loan or a one-time insurance payout.
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