What is operating profit?

[tonny]

Hey everyone, I came across the term “operating profit” while reviewing a company’s financial report. Can someone explain what operating profit means and how it’s different from net profit or gross profit?

 

[stevesmith]

Operating profit refers to the amount of money that a business makes due to its operations and subtracts its operating costs such as wages, rent, and depreciation but does not deduct its interests and taxes. It demonstrates the effectiveness of the primary operations of a company and serves as the significant benchmark of profitability and performance of management.

 

[kuldeep]

Operating profit is the profit that a business makes as a result of its main operations when deducted by the operating expenditures such as wages, rent, and depreciation yet not including interest and taxation. It demonstrates the efficiency with which a company conducts its core business and is one of the major indicators of profitability and management.