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A company's financial health isn't just about money coming in: It's also about money going out.

One measure of the money that it takes for a business to operate—think rent, staff salaries, travel expenses—is the business's operating cost, which is an essential component of a business's bottom line.

You can determine a company’s operating cost from its income statement, which details the expenses associated with bringing in sales revenue and producing a company's goods or services, as well as its overhead and other costs.

The bottom-most line of the income statement shows the company’s net income, whether it's positive (a profit) or negative (a loss). This tells you how the company performed during the period.

Operating costs are a key component of the income statement.