What Does Operating Income Mean?
The amount of profit realized from a business’s own operations, excluding operating expenses (such as cost of goods sold) and depreciation from gross income. Also referred to as operating profit and recurring profit. It is calculated as shown here: Investopedia explains Operating Income Operating income does not include items such as investments in other firms, taxes, and interest expenses. In addition, nonrecurring items such as cash paid for a lawsuit settlement often are not included. Operating income is necessary to calculate operating margin, which describes a company’s operating efficiency.
