Operating Income
Definition:
Operating income, also known as earnings before interest and taxes (EBIT), is a measure of a company's profitability that excludes non-operating income and expenses. It is calculated by subtracting operating expenses from operating revenue.
Formula:
Operating Income = Operating Revenue - Operating Expenses
Example:
Here are some examples of operating expenses:
Cost of goods sold: Cost of goods sold is the cost of the products or services that a company sells.
Selling, general, and administrative expenses: Selling, general, and administrative expenses are the expenses that a company incurs in order to sell its products or services and to manage its operations.
Depreciation and amortization: Depreciation and amortization are non-cash expenses that are used to account for the wear and tear of a company's assets.