Operating Income

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Operating income, sometimes also called Earnings Before Interest and Taxes (EBIT), is the profit a company earned through operations. All expenses, including cash expenses such as cost of goods sold (COGS), research & development, wages, and non-cash expenses, such as depreciation, depletion and amortization, have been deducted from the sales. Operating Income (EBIT) = {Revenue} - {Cost of Goods Sold} - {Selling, General, & Admin. Expense} (SGA) - {Research & Development} - {Depreciation, Depletion & Amortization} = {Gross Profit} - {Selling, General, & Admin. Expense} (SGA) - Research & Development} (R&D) - {Depreciation, Depletion & Amortization} (DDA) = {EBITDA} - {Depreciation, Depletion & Amortization} (DDA)