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Ella Williams

Investment Dictionary


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Operating Income

 

Operating income (operating profit) is the type of company’s profit that comes from operating activity. That means operating profit is lower than gross income by operating expenses but higher than pre-tax profit by financial results. Basically operating income should include only income from main activity of the company. 

 

Usually operating income can be found in company’s income statement. Most of the times operating income is equal to EBIT, but if company has significant non-operating (but also non-financial) income or expenses then EBIT and operating income will not be the same. In some way operating income is related with operating leverage but normally operating income is higher when other types of profit are higher. Those other types of profit are gross income, EBITDA, net income and other. For operating profitability comparison operating margin should be used. 

 

 






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