Income from Operations (IFO), also known as operating income or operating profit, is a financial metric that measures the profitability of a company’s core business activities before considering interest and taxes. It represents the earnings generated solely from the company’s primary operations, excluding non-operating revenue and expenses.

To calculate Income from Operations, you typically start with the company’s Gross Profit and then deduct Operating Expenses. The formula is as follows:

\[ \text{IFO} = \text{Gross Profit} – \text{Operating Expenses} \]

– **Gross Profit**: This is the revenue generated from sales minus the cost of goods sold (COGS). It represents the profit earned from producing and selling goods or services before considering operating expenses.

– **Operating Expenses**: These are the expenses directly related to running the company’s core business operations. They include items such as salaries, rent, utilities, marketing expenses, depreciation, and research and development costs.

Once operating expenses are subtracted from gross profit, the resulting figure is the Income from Operations. It reflects the profitability of the company’s primary business activities and provides insights into its operational efficiency and profitability.

Income from Operations is a key indicator used by investors, analysts, and stakeholders to assess a company’s financial performance and operating profitability. A positive IFO indicates that the company’s core operations are profitable, while a negative IFO suggests that operating expenses exceed gross profit, resulting in operating losses.