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This question is about employer.
Operating income vs. net income
The difference between operating income and net income is that operating income is a financial measurement of an organization's revenue after deducting any operating costs from the total revenue excluding taxes, while net income is a company's total revenue after all expenses have been paid, including taxes.
Operating income, also referred to as operating profit. Operating income is determined by operating costs and the cost of goods sold (COGS) from an organization's total revenue.
Operating expenses included in calculating operating profit often include items like rent, utilities, employee wages, marketing costs, depreciation of assets, and materials.
Net income is also referred to as net profit or the bottom line. Net income is calculated by subtracting all expenses and taxes paid from an organization's total revenue. This includes operating and non-operating expenses, such as interest payments and taxes.
In other words, net income considers every single expense of an organization.
Key Takeaways:
| Operating income | Net income |
|---|---|
| Operating income refers to a financial measurement of an organization's revenue after deducting any operating costs from the organization's total revenue excluding taxes. | Net income is a company's total revenue after paying all expenses, including taxes. |
| Operating income is also referred to as operating profit. | Net income is also referred to as net profit or the bottom line. |
| Operating income only takes into account costs that are accrued from a company's core business operations. | Net income considers all costs, including operating expenses and non-operating expenses. |
| Operating income does not include a company's net income. | Net income includes a company's operating income. |
| Operating income is an extremely important metric for an organization because it lets it know how cost-effective its profit generation is when all relevant operating expenses are considered | Net income is an even more vital metric because it represents the grand total of revenue and profit after deducting every expense. |
| High operating income levels prove that an organization can make a lot of money while keeping the costs to generate that revenue under control. | High net income levels are the best evidence of a company's strong financial standing and overall health. |
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