# What is the formula for calculating income from continuing operations?

Olivia Watson · August 4, 2026

> Income from continuing operations represents a company's profitability from its core, ongoing business activities, excluding any gains or losses from...

Income from continuing operations represents a company's profitability from its core, ongoing business activities, excluding any gains or losses from discontinued operations or one-time events.

To calculate income from continuing operations, you start with the company's operating income, which is revenue minus cost of goods sold and operating expenses.

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Operating income can then be adjusted by adding or subtracting non-operating income and expenses related to continuing activities, such as interest and dividends.

The next step is to subtract the company's income tax expense from the adjusted operating income to arrive at income from continuing operations.

This final figure provides a clear picture of the company's ability to generate profits solely from its regular, ongoing business operations.

Income from continuing operations is reported as a separate line item on the company's multi-step income statement.

Analysts and investors closely monitor this metric as it indicates the long-term sustainability and core profitability of the business.

Excluding discontinued operations and extraordinary items allows for a more accurate assessment of the company's underlying financial health.

Changes in income from continuing operations over time can signal shifts in the company's core business performance and competitiveness.

Comparing a company's income from continuing operations to industry peers can provide insights into its relative operational efficiency and competitive positioning.

Some companies may further break down income from continuing operations by business segment or product line to identify their most profitable core activities.

Accounting standards require clear distinction between income from continuing operations and the results of discontinued business lines or extraordinary events.

Properly calculating and reporting income from continuing operations helps ensure financial statements provide a true and fair representation of the company's performance.

Adjustments to income from continuing operations, such as impairment charges or restructuring costs, must be clearly disclosed and explained to maintain transparency.

The formula for calculating income from continuing operations is: Revenue - Cost of Goods Sold - Operating Expenses +/- Non-Operating Income/Expenses - Income Taxes = Income from Continuing Operations.

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