Final answer:
The current annual operating income is calculated by subtracting total expenses from total revenue; without specific financial data, the operating income cannot be determined.
Step-by-step explanation:
Understanding Current Annual Operating Income
To answer the student's question regarding the current annual operating income, the correct formula to use is option 3: Operating income = Total revenue - Total expenses. This measure shows the profitability of a company's core business operations, excluding costs like taxes and interest, which don't directly relate to the primary business activities. The current operating income cannot be accurately determined without specific financial data, such as the company’s total revenue and total expenses for the year.
Total revenue refers to the income a company generates from selling its products or services. It is calculated by multiplying the product’s price by the quantity sold. To calculate the profit, and by extension, the operating income, we must subtract the total cost or total expenses from the total revenue. The total cost includes all the expenses a company incurs to produce and sell its goods or services.
Therefore, if you have the necessary data, you can calculate the current annual operating income using the formula where you subtract total expenses from total revenue. Without this financial information, one cannot determine the operating income, hence the answer would be option 2: Need more information.