[Anonymous]

please help me review basic wording with me.

Sales

– COGS

= Gross Profit

– Operating Expenses

= EBIT, Operating Profit, or Operating Income

– Interest Revenue or Expense

= Income before income tax or EBT

– Income Tax

= Net Income

First of all, do I understand those correctly?

Second of all, what is Net Operating Income and where should it be located above?

I struggle with a ratio problem (ROI) from Wiley testbank.

Well, it says ROI = Net Operating Income / Average Invested Capital.

I assume ROI = Net Income / Average Invested Capital.

some say NOI is like EBIT and some say like Net Income…

at last, so ROI =…..I think I am confused.. please help, many thanx!!!

[futureCPA12]

Ok so I don't want to give you the wrong answer, but I believe net operating income is the same as net income. The “net” tells you its net of all expenses. Thats just my two cents.

The formula above looks correct to me. Just make sure you know the difference between absorption and variable costing.

[futureCPA12]

Ok so I don't want to give you the wrong answer, but I believe net operating income is the same as net income. The “net” tells you its net of all expenses. Thats just my two cents.

The formula above looks correct to me. Just make sure you know the difference between absorption and variable costing.

[Anonymous]

Net Income and Net Operating Income are not the same thing.

Operating income shows a company’s profit from ordinary operations before taxes and interest, so it is the line in your formula that you have “EBIT, Operating Profit, or Operating Income” written.

[Anonymous]

Net Income and Net Operating Income are not the same thing.

Operating income shows a company’s profit from ordinary operations before taxes and interest, so it is the line in your formula that you have “EBIT, Operating Profit, or Operating Income” written.

[futureCPA12]

Oh yeah duh. I don't know why I didn't see that. Its as on the income statement. You have income from operating activities. That is the same as net operating income. Then you'd have a section for “other income and expenses” and that would give you the net income.

[futureCPA12]

Oh yeah duh. I don't know why I didn't see that. Its as on the income statement. You have income from operating activities. That is the same as net operating income. Then you'd have a section for “other income and expenses” and that would give you the net income.

[nishvik]

@cpa_punk though your query is basic,i know it happens when you practice a lot and at some point you have doubt becoz after solving tedious calculations you tend to make simple calculations look tough :-}

Ok so i just checked the formula in both Wiley textbook and my Becker book it says ROI/ROA( Return on Investment/Asset)

Formula is Net Income after interest and taxes/Average Invested Capital.

So Net operating income is the income you derive from your main operations so after selling your goods/services what is left after you subtract cost of making those goods,rent,electricity,water.

Net Income comes after that which is really what you have in the end after interest and tax expenses.

I hope that helps 🙂

If I am wrong some where guys please pinpoint.

FAR- 79 -->Becker self study, Final review & Flashcards
REG -72-->Becker ,76-->Becker plus Wiley test bank
AUD- 73 Becker,72-->Becker+Wiley,69-->Added ninja notes,89 --> Added Gleim review
BEC- 84 Becker plus Wiley Test bank

I am Done !!!!

[nishvik]

@cpa_punk though your query is basic,i know it happens when you practice a lot and at some point you have doubt becoz after solving tedious calculations you tend to make simple calculations look tough :-}

Ok so i just checked the formula in both Wiley textbook and my Becker book it says ROI/ROA( Return on Investment/Asset)

Formula is Net Income after interest and taxes/Average Invested Capital.

So Net operating income is the income you derive from your main operations so after selling your goods/services what is left after you subtract cost of making those goods,rent,electricity,water.

Net Income comes after that which is really what you have in the end after interest and tax expenses.

I hope that helps 🙂

If I am wrong some where guys please pinpoint.

FAR- 79 -->Becker self study, Final review & Flashcards
REG -72-->Becker ,76-->Becker plus Wiley test bank
AUD- 73 Becker,72-->Becker+Wiley,69-->Added ninja notes,89 --> Added Gleim review
BEC- 84 Becker plus Wiley Test bank

I am Done !!!!

[Author]

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