What distinguishes operating income from net income?

The distinction between operating income and net income primarily revolves around the components each measure includes. Operating income specifically reflects the earnings derived from a company's core business operations. This encompasses revenues from primary activities, minus the costs directly associated with those operations, such as cost of goods sold and operating expenses.

On the other hand, net income is a broader measure that encompasses all revenues and expenses, not just those related to core business operations. This includes non-operating income, such as investment income or gains from asset sales, and also accounts for all expenses, including taxes and interest. Therefore, option C is correct because it captures the essence of what operating income is—earnings generated from the main business activities—whereas net income provides a comprehensive view of overall profitability after considering all types of income and expenses.

Understanding this distinction is crucial for financial analysis, as it helps stakeholders evaluate the performance of a company exclusively in terms of its operational efficiency and profitability, separating it from other financial factors that may distort the picture of the company's core activities.