Knowledge Base › Income statement › Operating Income (EBIT)
Income statement

Operating Income (EBIT) EBIT

The profit a company makes from its core business operations, before interest and taxes.

Part of the Reading Financial Statements course · Lesson 5 of 33
Formula
Gross Profit − Operating Expenses (= Revenue − COGS − Operating Expenses)

What it is

Operating income, often called EBIT (earnings before interest and taxes), is the profit left after subtracting both cost of goods sold and operating expenses such as selling, general, administrative, and research costs. It shows how profitable the core business is, separate from how the company is financed or taxed. EBIT and operating income are usually the same, though EBIT can differ slightly when non-operating items (such as interest income or other income) are included.

Why it matters

Operating income isolates the performance of the business itself, making it easier to compare companies with different debt levels or tax situations. A pitfall is that companies may exclude 'one-time' charges to flatter operating income, so it is worth checking whether those exclusions are genuinely non-recurring.

How it's calculated

Subtract operating expenses from gross profit, or equivalently subtract COGS and operating expenses from revenue.

How Quintarthai uses it

Operating income (EBIT) is shown in the 10-year income statement on the Financials tab and feeds operating-margin and enterprise-value multiples in the Ratios tab of each company page.

Cross-border note. IFRS and US GAAP can classify items like restructuring charges or interest differently, so operating income may need minor normalization when comparing a Canadian filer to a US peer.

FAQ

Are operating income and EBIT always identical?
Usually, but not always — operating income is the profit reported from core operations, while EBIT can be reached by adding interest and taxes back to net income, a path that may sweep in some non-operating items.
Why exclude interest and taxes?
Removing interest and taxes lets you judge the underlying business without the effects of its financing structure and tax jurisdiction, which makes peer comparison cleaner.
Related terms
Gross ProfitEBITDANet IncomeRevenueEffective Tax RateCost of Goods Sold
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