Operating Income
Definition
Operating income is profit from the business's normal operations — revenue minus operating expenses like rent, payroll, and supplies. It excludes interest, taxes, and non-operating items.
Example
A business has $10,000 in revenue and $6,000 in operating expenses. Operating income is $4,000. Interest expense of $200 is shown separately below.
Why It Matters
Operating income shows whether the core business is profitable before financing and tax effects. It helps the owner understand the real operating performance.