Operating Income
Profit earned from core business operations, after deducting operating expenses but before interest and taxes.
What is Operating Income?
Operating income (also called operating profit or EBIT — Earnings Before Interest and Taxes) is the profit a company generates from its core business operations, calculated by subtracting operating expenses (cost of goods sold and operating expenses such as salaries, rent, and depreciation) from gross profit. Unlike net income, operating income excludes interest expense and income taxes, making it useful for evaluating operational efficiency independent of a company's financing decisions or tax situation. Operating income is found on the income statement between gross profit and income before taxes. A positive and growing operating income signals a healthy, self-sustaining business.
Example
Apple Inc. reported operating income of $123.2 billion for fiscal year 2024 on revenues of $391.0 billion, equating to an operating margin of approximately 31.5% — among the highest of any large-cap technology company, reflecting Apple's strong pricing power and operating efficiency.
Source: Apple Inc. 10-K FY2024