Operating activities are the daily activities of the company involved in the manufacture and sale of its products, income, and General administrative and repair works. Key operating activities of the company include the production, sales, advertising and marketing activities.
Operating income recorded in the financial statements of the company is the operating profit remaining after deducting operating expenses from operating revenues. Usually the operating activities section of the company statement of cash flows shows inflows and outflows of cash resulting in the production activities of the company.
Key Operating Income
Key operating activities that produce income for the company are the manufacture and sale of its products or services. Sales activity may include sales of own production or products of other companies, as in the case of retail trade. Companies that mainly sell services may or may not also sell goods.
For example, a Spa business, in addition to providing services such as massage, can also look for additional income proceeds from the sale of products for health and beauty.
Interest and dividend income and total operating cash flow, are not considered a key operating activities, as they are not part of the main activities of the company.
Key Operating Expenses
Expenses key operating activities include manufacturing costs, and advertising costs and distribution of the products or services of the company. Production costs include all direct production costs included in cost of goods sold (cogs).
The running costs associated with advertising and marketing includes advertising costs of the company and its products or services, using a variety of media, whether traditional or online platforms. In addition, marketing costs include such things as appearing at exhibitions and participation in community events such as charity fundraisers.