What is Operating Income?
Operating income is a calculation for a company of the difference between the operating revenue and the operating expenses of that company. Operating income is frequently used as a synonym for earnings before interest and taxes (EBIT), although strictly speaking EBIT includes non-operating income as well as operating income. It is an important concept both for a company to determine their own health, as well as for an investor to be able to gauge the earnings potential of a company before they invest in it. There are two main things calculated to determine operating income at a company: the operating revenue of the company and the operating expenses. Operating revenue is any revenue that comes in through standard revenue channels, such as sales of widgets, but excludes things like interest income or dividend income. Operating expenses are the expenses incurred in the daily operations of the company, but exclude extraordinary expenses. Generally, one can look at operating revenue as the
