What does operating profit mean?

Operating profit is the net income derived from a company's primary or core business operations. Operating profit is also (wrongfully) referred to as earnings before interest and tax (EBIT), as...

What is the formula for operating profit?

The operating profit would be = (Gross profit – Labour expenses – General and Administration expenses) = ($270,000 – $43,000 – $57,000) = $170,000 Using the operating margin formula, we get – Operating Profit Margin formula = Operating Profit / Net Sales * 100 Or, Operating Margin = $170,000 / $510,000 * 100 = 1/3 * 100 = 33.33%. Colgate Example

What is the definition of operating profit?

Operating profit measures the efficiency and profitability of a business based on its core business functions. Calculations of operating profit do not include the deduction of interest and taxes, and for this reason, it is commonly referred to as EBIT or earnings before taxes. This value also excludes earnings from ancillary businesses.