The Income/Outcome^® Contextuary

Operating Income
Calculation: Sales less Cost of Sales (COS) less Operating Expense.

Operating Margin
Ratio: Operating Income as a percentage of Sales.


Operating Income is one of many possible finance terms for the same concept. It can also be known as:
Earnings Before Interest and Tax (EBIT),
Operating Profit,
Measured Operating Income (MOI),
Profit Before Interest and Tax (PBIT) in the United Kingdom,
Result No. 3 in Germany,
The Primary Result in Denmark.

This is a real What do you mean by that? with people sometimes using the two terms interchangeably. We are using ‘margin’ is to denote a percentage (of Sales).

Example:
- Sales of 200 less COS of 80 less Operating expense of 70 leaves Operating Profit of 50.
- Operating Profit of 50 divided by Sales of 200 equals Operating Margin of 25%.