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LSDefine
Simple English definitions for legal terms
net operating income
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A quick definition of net operating income:
Net operating income is the money a business makes from its operations after subtracting its operating costs. It's like how much money you have left after paying for all the things you need to run your lemonade stand, like lemons, sugar, cups, and water. This is important because it helps the business know how much profit it's making and how much it can reinvest in the business or pay out to its owners.A more thorough explanation:
Net operating income refers to the income earned from operating a business after subtracting operating costs. It is the total revenue generated by a business minus all the expenses incurred in running the business.
For example, if a company earns $500,000 in revenue and incurs $300,000 in operating expenses, its net operating income would be $200,000.
Net operating income is an important metric for businesses as it helps them determine their profitability and make decisions about future investments and expenses.