Operating Income Calculator

About this calculator

Operating income — also called EBIT, or earnings before interest and taxes — measures the profit a business generates from its core operations before accounting for financing costs or tax effects. It's calculated by starting with revenue, subtracting cost of goods sold to get gross profit, then subtracting operating expenses (rent, salaries, marketing, and other day-to-day costs) that aren't part of the direct cost of production.

Because it excludes interest and taxes, operating income lets analysts and investors judge how profitable the underlying business is, independent of how it's financed or where it's taxed — useful for comparing companies with different debt loads or tax situations. This calculator takes revenue, cost of goods sold, and operating expenses, and returns both operating income and operating margin, the percentage of revenue it represents.