◈ GLOSSARY · BUSINESS & ENTREPRENEURSHIP
Operating Income.
A definition, in plain English — with the books that teach it.
ClearValue Books · reviewed against sources ·
◈ DEFINITION
What it means
Definition
Operating income is what's left after you subtract COGS plus all operating expenses (salaries, rent, marketing, R&D) from revenue — but BEFORE interest and taxes. It's also called EBIT. It shows whether the core business actually makes money on its own, separate from how it's financed or taxed.
◈ IN PRACTICE
Example
A company has $50M in revenue, $20M COGS, and $25M operating expenses. Operating income = $50M − $20M − $25M = $5M. Operating margin = $5M / $50M = 10%.
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