Operating income

In accounting, operating income means gross profit less operating expenses — the result of the core business before interest, other income and tax.

Layer: Lexicon
Defined in: Lexicon
Components: 1

Authority

This definition follows ASC 220.

Every citation in this system, with the text we read and the date we checked it, is in US GAAP and where these rules come from.

The lesson that teaches this

Accounting, 0 to 1 — a free course taught end to end on one month of one company, with the spreadsheet exercises to work it yourself.

10The income statementTwo of the five account types, arranged so each subtotal answers a different question about how the month went.10 min

Operating income, in use

Quoted from the document that use the word — what it does to an interface, in the spec's own sentence.

Revenue → COGS → Gross profit → Operating expenses → Operating income → Other → Net income.
Statements — 61. ProfitAndLoss

For founders

The same idea written for a founder: what it costs a startup that ignores it, and what to do in a real month.

How to read an income statement (P&L)Revenue, cost of revenue, gross margin, operating expenses and net income, read line by line, on accrual basis, with the mistakes founders make most.

What it is not called

Each of these is a real word for a different thing. Using it here is what makes a product read as though it was built by someone who has not done the work.

EBIT (which adds back non-operating items)
EBITDA

Components that render this

The concept is not documentation-only. These are the components that name it in their specification, grouped and stated exactly as the catalog states them.