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Simple English definitions for legal terms
operating income
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A quick definition of operating income:
Operating income is the money a business makes from its regular activities, like selling products or providing services. It's different from other types of income, like money earned from investments or gifts. Operating income is what's left over after the business pays for things like salaries, rent, and supplies. It's important because it shows how well the business is doing and how much money it can use to grow or pay dividends to shareholders.A more thorough explanation:
Operating income refers to the money a business earns from its normal operations or activities. It is the income generated from selling goods or services, minus the cost of producing those goods or services. This type of income is also known as ordinary income.
For example, if a company sells $100,000 worth of products and it costs $70,000 to produce those products, the operating income would be $30,000.
Operating income is important because it shows how much money a business is making from its core operations. It does not include income from investments or other sources.