The operating income is a way to measure the profitability of the firm and it shows what the firm has earned from its operations. To calculate operating income, subtract the operating expenses from the net income. You should proceed in the following way:
Revenue/ Gross revenue
Less: Cost of goods sold
= Net Revenue
Less: Operating expenses
= Operating income
Generally, the items that are a part of the operating expenses are the Selling, general and administrative expenses, depreciation and amortization and some other miscellaneous expenses.
Revenue/ Gross revenue
Less: Cost of goods sold
= Net Revenue
Less: Operating expenses
= Operating income
Generally, the items that are a part of the operating expenses are the Selling, general and administrative expenses, depreciation and amortization and some other miscellaneous expenses.
