How to Calculate Operating Income Return on Investment

By Motley Fool Staff – Updated Apr 30, 2025 at 4:46 PM

Key Points

Return on investment (ROI) measures overall investment success; operating income ROI focuses on core business performance.
Calculate operating income ROI by dividing operating income by total operating assets.
This metric aids in assessing true earnings, excluding factors like financing and taxes.

Most investors are familiar with calculating return on investment, or ROI. It's one of the most-common metrics used to determine an investment's success or failure. You may not, however, be as familiar with operating income return on investment.

Operating income return on investment can be a useful tool to enhance your understanding of a company, which can pay big dividends for your investing.

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A dial showing return on investment when risk is set. — Image source: Getty Images.

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Operating income is a company's profits before taking into consideration expenses that are not directly related to the core business' performance. Operating income, therefore, includes just a company's revenues, its costs of goods sold, and its operating expenses, giving investors and managers a much clearer view of how the company is managing the key items it can control, without concern for tax and capital-structure issues beyond a manager's reach.

Many use operating income synonymously with a company's earnings before interest, taxes, depreciation, and amortization (EBITDA), which is an acceptable simplification, particularly when using for investment research.

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