What is the formula for calculating merchandising net operating income?

Merchandising net operating income is calculated by taking the revenue generated from sales and subtracting the operating expenses associated with running the business, which provides a clear picture of the profitability of operations before considering financing costs and taxes. This formula is important for evaluating how efficiently the facility is generating income from its core operations and managing its expenses.

Operating expenses may include a variety of costs like payroll, utilities, rent, and marketing—essentially any cost that is necessary to maintain daily operations but not directly tied to the production of goods sold. By focusing on the net income derived from operations, this approach helps assess the health of the business in terms of operational effectiveness and cost management.

While other options consider elements of revenue and costs, they do not accurately represent the net operating income as they either omit critical components or do not encapsulate the comprehensive nature needed to evaluate profitability within a merchandising context effectively.