Operating Income

Operating income means the profit a company earns from its core business operations before interest and taxes. In simple terms, operating income shows how much profit the main business makes. Operating income is important because it helps investors understand whether a company’s core operations are profitable. It removes some effects from financing, taxes, and non-operating items. For example, if a company has gross profit of $500 million and operating expenses of $300 million, its operating income is $200 million. Operating income is not the same as net income. Net income includes interest, taxes, and other non-operating items.