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Corporate Basics

What is Income from Operations?

Income from operations will be the net income which is solely focused on revenue from operations minus the cost of operations.

It excludes gains or losses from minority interest investments, or sale of assets. Income from Operations is also called Net Operating Income (NOI). In accounting terms it is arrived at by subtracting operating expense from gross profit, where gross profit is net sales minus cost of goods sold.

Operations might be primary or secondary. Primary operations includes the sale of goods and services that are part of a company’s core business. Secondary operations might be rental income from company-owned property and other additional income sources that are not part of the company’s core business.

Income from operations tends to only consider primary operations, and disregards non-operating income such as gains from the sale of assets (such as buildings), interest income, and so on. Often these non-operating gains are called extraordinary or nonrecurring gains.

Gains and losses resulting from investments that represent a minority stake in a company are not considered. Income from operations only pertains to a company’s primary business and that of its subsidiaries.

What is an Operating Profit?
What is Operating Cash Flow (OCF)?

Keywords: gross margin, corporate finance, gross income, Net Operating Income (NOI), operations,