Join Rudolph Rosenberg for an in-depth discussion in this video Operating income, part of Financial Literacy: Reading Financial Reports.
- [Voiceover] Operating income…called as well OpInc is…just a gross margin…the result of a subtraction…between revenue and expenditures.…The major difference with gross margin…is that it includes more expenditures.…As we have seen earlier,…gross margin is the difference…between revenue and costs…and is specific to the activities…around selling product or services.…It is the production in the wide sense…related profitability.…Operating income is a wider type of profitability…and it includes as well…all the operating expenses.…
It is therefore the profitability…of running the business in a general term.…You can calculate it using one of the following formulas.…Operating income is equal to revenue…minus costs…minus operating expenses…or operating income is equal…to cross margin…minus operating expenses.…Your production could be profitable…but not your business.…For example,…selling ice cream could be profitable…but not enough to cover all of the expenses…of your business.…You could be selling ice cream…for a higher amount of money…
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- What is a financial statement?
- Reading the balance sheet
- Understanding depreciation, liabilities, and equity
- Reading the income statement
- Understanding revenue, costs, profitability, and net income
- How cash flow works
- Analyzing financial documents with context<br><br>
- The PMI Registered Education Provider logo is a registered mark of the Project Management Institute, Inc.
Skill Level Appropriate for all
1. Financial Statements
2. The Balance Sheet
3. The Income Statement
4. The Cash Flow Statement
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