How is operating income defined?

Operating income is defined as earnings before interest and taxes, which focuses on the profitability of a company's core business operations without considering the effects of financing and tax strategies. This measure provides investors and analysts with a clear picture of how well a company generates profit from its operational activities, excluding any extraneous factors.

By focusing on operating income, stakeholders can assess the efficiency of the company's operating model and its ability to generate revenue from its primary business activities. This metric is crucial for understanding operational performance independently from the influences of capital structure or tax obligations, thereby offering valuable insights into the underlying business health.