Learn · Explainer
Operating income vs. net income
The two profit lines on the income statement, what sits between them, Apple's bridge from one to the other, and both margins for each company.
The short answer
Operating income is what a company earns from running its business: revenue minus the cost of sales and operating expenses such as R&D, marketing and administration. Net income is what's left after everything else too: interest paid and earned, gains and losses on investments, other one-off items and income tax. For the 76 companies here, the median operating margin is 20.9% and the median net margin 16.8%. 7 reported net income above operating income in their latest year.
From operating income to net income: Apple
Apple's fiscal 2026 income statement shows each step:
| Line | Fiscal 2026 |
|---|---|
| Revenue (net sales) | $478.8B |
| Operating income | $158.1B |
| Other income and expense, net | $1.2B |
| Income before taxes | $159.2B |
| Income tax | $27.1B |
| Net income | $132.2B |
Other income and expense is income before taxes minus operating income. Source: Apple 10-K for fiscal 2026.
What sits between the two
- Interest. Interest paid on debt lowers net income; interest earned on cash raises it. A company with a lot of debt can have a healthy operating margin and a much thinner net margin. Interest coverage compares operating income with interest expense.
- Investment gains and losses. Changes in the value of equity stakes run through net income below the operating line, which can make net income swing even when the business is steady.
- Income tax. The biggest item for most profitable companies. The effective tax rate explains why it differs from the 21% federal rate.
- Discontinued operations, the results of businesses sold or spun off, are shown separately just above net income.
Across the table, operating margin is a median 3.9 percentage points higher than net margin.
Which one to look at
Operating income is the better guide to how the core business is doing, since it leaves out financing choices, tax and investment swings. Net income is the figure behind EPS and the P/E ratio, and what's ultimately available to shareholders. Companies define some operating items differently, so profit margins compare best within an industry.
Every company
Revenue, operating income and net income for the latest fiscal year, from each 10-K. Banks are left out, since they don't report an operating income line.
Common questions
What is the difference between operating income and net income?
Operating income is profit from the business before interest, investment gains and losses, and tax. Net income is the bottom line after all of them.
Can net income be higher than operating income?
Yes, when interest income, investment gains or a tax benefit outweigh interest and tax costs. 7 of the 76 companies here reported it in their latest year.
Is operating income the same as EBIT?
Close, but not always. EBIT usually adds non-operating income and expenses back in, so it can differ from the operating income line.
Why don't banks report operating income?
For a bank, interest is the main source of revenue, so its income statement starts with net interest income and doesn't separate an operating line.
Which margin uses operating income?
Operating margin: operating income divided by revenue. Net margin divides net income by revenue.
See it side by side
The same figures for two companies at once, each linked to its 10-K:
Disclosures
- Editor holdings
- The editor holds shares of Tesla (TSLA) and SpaceX in a long-term retirement account. The editor holds no position in any other company named on this page. As of Nov 11, 2026.
- Compensation
- Nobody paid for this page. No affiliate links on this page.
- Sources
- Each company's own SEC filings, linked next to each number.
- Last updated
- Nov 9, 2026
General education, the same for every reader. Not a recommendation to buy, sell or hold any security, and it doesn't consider your situation.
More in Learn and Tools · Methodology & Disclosures explains where every number comes from.