Question

If you were interested in evaluating the profitability of a company and could have only limited historical data, would you prefer to know operating income or net income for the past five years?

Answer 1

I will prefer to know the OPERATING INCOME. Operating income refers to the operating profits of a company before the taxes and interests are removed. It reflects the true situation of the company and can be used to analyse if a company is making profits from its manufacturing process or not. The net income of a company has some expenses and costs that do not reflect the core operations of the company.