Operating income (operating profit, EBIT) is gross profit minus operating expenses — sales, marketing, R&D, general and administrative costs. It measures profitability from core business operations before interest and taxes. Operating margin (operating income / revenue) is the standard efficiency benchmark. Software companies often achieve 30%+ operating margins; capital-intensive industries (airlines, retailers) run 5-15%. Operating income excludes interest (financing decisions) and taxes (jurisdiction-dependent), making it a cleaner comparison across companies with different capital structures. EBITDA adds back depreciation and amortization for an even more capital-structure-neutral metric.
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Operating Income
August 22, 2026 · Aditya Gupta
Investing
Related terms
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