What is the standard business performance measure that results from subtracting all qualified operating expenses from income?

• A. Net operating income
• B. Operating cash flow
• C. Gross profit
• D. Net income

Answer: (B)

Cash from operations is the amount of cash a business generates from its core activities after paying the day-to-day operating costs. When you subtract all qualified operating expenses from the income produced by those same activities, you’re left with the cash that the business can actually use to fund operations, pay debt, or invest in maintenance and growth. This measure focuses on cash generation rather than just profitability, and it excludes financing activities and investing activities, which is why it’s the best fit for describing the cash impact of operating performance.

To distinguish it from the other terms: gross profit only subtracts the cost of goods sold and ignores other operating expenses; net income subtracts all expenses and non-operating items (and includes non-cash items), giving the bottom-line profitability; net operating income is a term typically used in real estate to denote income after operating expenses but before financing and taxes.