Income from operations (IFO),
Definition of Income from operations (IFO):
Income from operations is the same as operating income. By only looking at the profit generated in normal business operations, it makes it easier to understand the potential future profitability of the company. To calculate operating income, start with revenue from operations, subtract the cost of goods sold and other operating expenses such as the cost of labor. Interest earned or paid should not be included. Taxes paid should not be deducted either. Do not include any gains or losses from investment or the purchase or sale of business assets. Income from operations only involves revenue and expenses involved in the day-to-day run of the business.
Profits generated from regular business operations. Barring changes in outside circumstances, the average income from operations in past years is often assumed to be a fairly reliable indicator of future earnings. This income does not count profit realized from other types of business activities such as the sale of a facility that has appreciated in value. It also excludes income from operations that did generate income but have since been discontinued.
Income from operations (IFO) is also known as operating income or EBIT. Income from operations is the profit realized from a business' own operations. Income from operations is generated from running the primary business and excludes income from other sources. For example, this would exclude income generated from selling the property of a manufacturing company.
Meaning of Income from operations (IFO) & Income from operations (IFO) Definition