Introduction
Operating income refers to the revenue generated from company's core business activities such as selling products, commissions, service charges etc. On the other hand, non-operating income is a revenue generated from non-core business activities such as gains from selling of assets, dividend received, rental income etc.
Difference Between Operating Income And Non-operating Income
The main dissimilarities of differences between operating and non-operating income can be described as follows:
1. Meaning
Operating Income : It refers to the amount of income a firm generates from its daily core-business activities within a specific period of time.
Non-operating Income: It refers to the amount of money a company generates outside of a core-business activities.
2. Source
Operating Income : The main source of operating income is core business activities such as sales, commission charge etc.
Non-operating Income: It is generated from incidental activities such as selling of assets, investment profit etc.
3. Frequency
Operating Income: It occurs regularly
Non-operating Income: It is occasional
4. Predictability
Operating Income: It is more predictable than non-operating income
Non-operating Income: It is less predictable than operating income because it occurs occasionally
5. Reflect
Operating income: It shows the operational efficiency of the business
Non-operating income: It shows ancillary activities
6. Impact On Profitability
Operating income: It has high impact on the profitability of the business
Non-operating income: It doesn't have significant impact on profitability
Operating Income Vs Non-Operating Income (Comparison Table)
|
Basis |
Operating Income |
Non-Operating Income |
|
Frequency |
Regular |
Occasional |
|
Source |
Sales, commission etc. |
Selling of assets, interest etc, |
|
Predictability |
Yes |
No |
|
Reflect |
Operational efficiency |
Occasional financial activities |
|
Impact On Profitability |
High impact |
Less impact |