Operating Income

Operating Income is a measure of a company's ability to earn money from ongoing operations.  Operating income is a measure of profitable operations before interest expense, or income taxes, are paid.  Operating income is sometimes also referred to as Earnings Before Interest and Taxes, or EBIT.

A company's operating income is calculated as follows:

Revenues - Cost of Good Sold = Gross Profit

Gross Profit - SG&A - Depreciation = Operating Income

Operating income for a company can be found on the income statement.