Operating income is a measure of a companys profitability that shows how much profit a company generates from its core operations after deducting operating expenses such as wages, depreciation, and cost of goods sold (COGS) . It is also called income from operations. Operating expenses are costs incurred from normal operating activities and include items such as office supplies and utilities. Operating income is calculated by subtracting direct and indirect operational expenses from net sales revenue. It excludes non-operational revenue and expenses that can obscure the performance of core business operations, such as interest, taxes, and one-time events. Operating income is considered a good indicator of how well the company is managed. It is different from net income, which takes into account all revenue and expenses, including non-operating income from investments and the sale of assets, as well as non-operating costs such as taxes, interest, and one-time charges.