1. What is Operating Income?

Operating Income, also known as EBIT (Earnings Before Interest and Taxes), measures a company's profit from its core business operations. It represents the amount of profit realized from business operations after subtracting operating expenses like wages, depreciation, and cost of goods sold.

2. How Does the Calculator Work?

The calculator uses the simple formula:

Where:

• Revenue — Total income generated from sales of goods or services
• Operating Expenses — Costs required to run the business (COGS, salaries, rent, etc.)

Explanation: The formula shows how much profit a company makes from its operations before accounting for interest and taxes.

3. Importance of Operating Income

Details: Operating income is a key metric for assessing a company's operational efficiency and profitability. It helps investors and analysts evaluate how well a company generates profit from its core business activities, excluding the effects of financing and tax structures.

4. Using the Calculator

Tips: Enter revenue and operating expenses in USD. Both values must be positive numbers. The calculator will automatically compute the operating income.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between operating income and net income?
A: Operating income excludes interest and taxes, while net income includes all expenses and is the "bottom line" profit.

Q2: Can operating income be negative?
A: Yes, if operating expenses exceed revenue, it indicates the core business is losing money.

Q3: How often should operating income be calculated?
A: Typically calculated quarterly and annually as part of financial statements.

Q4: What's a good operating income margin?
A: Varies by industry, but generally 15% or higher is considered healthy.

Q5: Does operating income include depreciation?
A: Yes, depreciation is typically included in operating expenses.