How is operating income defined?

Operating income is defined specifically as the income derived from core business operations. This measure focuses on the revenue that a company generates from its primary business activities, excluding any income from non-operating sources such as investments or sales of assets. It is calculated by subtracting the cost of goods sold and operating expenses from the total revenue generated from those core activities.

This distinction is crucial for analyzing a company’s operational efficiency and profitability. By isolating income from core operations, stakeholders can assess how well a company performs in its primary business areas, without the noise created by other revenue sources that might not be sustainable or indicative of ongoing business performance.

Other options highlight broader or different categories of income, such as total income from all sources, net income after all expenses, and income from investments, which do not specifically reflect the operational effectiveness of the business itself. Therefore, understanding operating income helps investors and analysts gauge the health and profitability of the company's main activities.