Operating Income
Profit from core operations before interest and taxes.
Definition
Operating income equals revenue minus operating expenses (cost of goods sold, SG&A, depreciation). It excludes interest expense, taxes, and one-time items, providing a cleaner view of core business profitability.
Formula
Operating Income = Revenue - Cost of Revenue - Operating Expenses
Why It Matters
Operating income isolates the profitability of the core business. For financial companies, comparing operating income trends across peers reveals which firms are gaining operating leverage and which are losing it.