What is Operating Income?
Nexa Consultancy | Startup & Finance Glossary
Operating Income is a measure of a company's profitability from its core business operations. It is calculated by subtracting the Cost of Goods Sold (COGS) and all operating expenses from total revenue. It is also known as Earnings Before Interest and Taxes (EBIT).
For Startups: Operating Income is a key indicator of a company's operational efficiency and the profitability of its core business model, before factoring in non-operating items like interest income or taxes. A positive and growing operating income shows that the startup's fundamental business is healthy and scalable.
Calculation: Operating Income = Gross Profit - Operating Expenses.
Example: A company has a Gross Profit of ₹50 Lakhs and total operating expenses of ₹30 Lakhs. Its Operating Income is ₹20 Lakhs.