Difference Between Operating Income and Net Income

Operating income is revenue less any operating expenses, while net income is operating income less any other non-operating expenses, such as interest and taxes. ... Net income (also called the bottom line) can include additional income like interest income or the sale of assets.

1. How do you get net income from operating income?
2. What is the difference between operating income and revenue?
3. What are the major differences between operating cash and net income?
4. What does net operating income mean?
5. Can Net income be higher than operating income?
6. What are the examples of operating income?
7. What is operating profit formula?
8. Is operating revenue the same as gross profit?
9. What does a positive net income mean?
10. Is accounts receivable included in net income?
11. Why is operating cash flow higher than net income?

How do you get net income from operating income?

There are three formulas to calculate income from operations:

1. Operating income = Total Revenue – Direct Costs – Indirect Costs. OR.
2. Operating income = Gross Profit – Operating Expenses – Depreciation – Amortization. OR.
3. Operating income = Net Earnings + Interest Expense + Taxes. Sample Calculation.

What is the difference between operating income and revenue?

Revenue is the total amount of income generated by a company for the sale of its goods or services before any expenses are deducted. Operating income is the sum total of a company's profit after subtracting its regular, recurring costs and expenses.

What are the major differences between operating cash and net income?

Key Takeaways. Net Income is the result of revenues minus the expenses, taxes, and costs of goods sold (COGS). Operating cash flow is the cash generated from operations, or revenues, less operating expenses. Many investors and analysts prefer using operating cash flow as an indicator of a company's health.

What does net operating income mean?

Net Operating Income, or NOI for short, is a formula those in real estate use to quickly calculate profitability of a particular investment. NOI determines the revenue and profitability of invested real estate property after subtracting necessary operating expenses.

Can Net income be higher than operating income?

But it IS possible for Net Income to be more than Operating Income. This is because Operating Income does not include discontinued operations (product lines that were shut down) or extraordinary transactions (sales of assets, like if Pfizer sold off a subsidiary or a drug patent).

What are the examples of operating income?

How to Calculate Operating Income. Operating expenses include selling, general, and administrative expense (SG&A), depreciation, and amortization, and other operating expenses. Operating income excludes items such as investments in other firms (non-operating income), taxes, and interest expenses.

What is operating profit formula?

Operating profit can be calculated using the following formula: Operating Profit = Operating Revenue - Cost of Goods Sold (COGS) - Operating Expenses - Depreciation - Amortization.

Is operating revenue the same as gross profit?

Gross profit is revenue minus the cost of goods sold (COGS), which are the direct costs attributable to the production of the goods sold in a company. ... Operating profit is gross profit minus all other fixed and variable expenses associated with operating the business, such as rent, utilities, and payroll.

What does a positive net income mean?

If net income is positive, the company is liquid and has a higher probability of paying off its debts, paying dividends to shareholders, and paying its operating expenses. Cash flow is reported on the cash flow statement, which shows where cash is being received and how cash is being spent.

Is accounts receivable included in net income?

Collecting accounts receivable that are in a company's accounting records will not affect the company's net income. (Generally speaking, net income is revenues minus expenses.) ... Cash receipts from collecting accounts receivable or from the proceeds of a bank loan are not revenues.

Why is operating cash flow higher than net income?

Net income figures include non cash costs such as depreciation and excludes other cash expenditures, such as purchases of plants or equipment. ... If net income is much larger than cash flow from operations, it's a signal that the company's earnings quality-the usefulness of earnings-is questionable.