What is operating expenses and operating revenue?
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Answer:
Operating income and revenue are important metrics that show the income earned by a company. However, the two numbers are different ways of expressing a company's earnings. Revenue and operating income have different deductions and credits involved in their calculations, and both are essential in analyzing whether a company is performing well.
Revenue
Revenue is the total amount of income generated by a company for the sale of their goods or services. Revenue is often called the top line because it's located at the top of the income statement. Revenue is the income generated before any expenses are taken out. Therefore, when a company is said to have "top-line growth," the company's revenue is growing. Revenue is also called net sales which is revenue minus any returns of purchased merchandise.
For example, a shoe retailer earns revenue from selling shoes, but the revenue figure is before deducting any expenses for running the business. If the company has other sources of income from investments, for example, the income is not considered revenue since it wasn't the result of the primary business. Any additional income is accounted for separately.
Operating Income
Operating income is a company's profit after subtracting operating expenses or the costs of running the daily business. Operating income helps investors separate out the earnings for the company's operating performance by excluding interest and taxes.
Operating expenses include selling, general & administrative expense (SG&A), depreciation, and amortization, and other operating expenses. Operating income does not include money earned from investments in other companies or non-operating income, taxes, and interest expenses. Also, any nonrecurring items are not included such as cash paid for a lawsuit settlement. Operating income can also be calculated by deducting operating expenses from gross profit whereby gross profit is total revenue minus cost of goods sold.
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Operating revenue is revenue generated from a company primary business activities means production
Nd operating expenses is an expense incurred in carrying out an organisation day to day activities but not directly associated with production .