How to Find Operating Income

Calculating operating income

There are three primary financial statements. Of these, one is referred to as the income statement. The income statement details the flow of revenue and expenses throughout the year to arrive at a net income amount that is used to calculate earnings per share. In addition to net income there are other levels of profitability, which include gross profit and operation income. Operating income is also referred to as EBIT (earnings before interest and taxes) by the investment community.

Instructions

1. Download the 10K or annual report from the company's website. You can also request these documents from the Investor Relations department of the company or any company representative. All public companies are required by law to produce a 10K and/or annual report. Both are full disclosure documents that help investors to make informed decisions about investments. These documents are also available through your broker.

2. Turn to the income statement. The first line item of the income statement is usually Sales or Revenue.

3. Locate the "Operating Income" line item, which appears after the "Gross Profit" and "Operating Expenses" line items. Operating Income is revenue or sales minus costs of goods sold minus operating expenses. It is also referred to as EBIT, or earnings before interest and taxes.

Tips & Warnings

• For more information about operating income, go to the notes to the financial statement, which is located behind the financial statements. Each line item, including operating income, is discussed in greater detail.

References

• Investopedia: Profitability