Operating income (EBIT) is profit from core operations, before interest and tax.
▶ Watch: Operating Income (EBIT) explained in 24 seconds
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.
Check your understanding
Why does operating income (EBIT) deliberately leave out interest and taxes?
Stripping out interest and taxes isolates core operating performance, making peer comparison cleaner across companies with different debt loads and tax jurisdictions.