metrics explained

Operating Income vs Operating Expenses: What's the Difference?

Operating income and operating expenses are two key components of a company's income statement. Operating income is a company's profit from its core business activities, while operating expenses are the costs incurred to generate that income. The difference between operating income and operating expenses is a company's operating profit.

A company's operating income is its revenue from its core business activities minus its operating expenses. Operating expenses include the costs of goods sold, selling, general and administrative expenses, and depreciation and amortization.

The operating income of a company can be a good indicator of its financial health. A company with a high operating income is usually more profitable than a company with a low operating income. Operating income is also a good indicator of a company's efficiency. A company with a high operating income is usually more efficient than a company with a low operating income.

Operating expenses are the costs incurred to generate a company's operating income. Operating expenses include the costs of goods sold, selling, general and administrative expenses, and depreciation and amortization. Operating expenses are deducted from a company's revenue to arrive at its operating income.

The operating expenses of a company can be a good indicator of its financial health. A company with high operating expenses is usually less profitable than a company with low operating expenses. Operating expenses are also a good indicator of a company's efficiency. A company with high operating expenses is usually less efficient than a company with low operating expenses.

The Bottom Line

The difference between operating income and operating expenses is a company's operating profit. Operating income is a company's revenue from its core business activities minus its operating expenses. Operating expenses include the costs of goods sold, selling, general and administrative expenses, and depreciation and amortization. The operating expenses of a company can be a good indicator of its financial health. A company with high operating expenses is usually less profitable than a company with low operating expenses. Operating expenses are also a good indicator of a company's efficiency. A company with high operating expenses is usually less efficient than a company with low operating expenses.

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