The operating profit of a company is the total earnings from its core business functions for a given period, excluding interest and taxes. It also excludes profits from ancillary investments, such as earnings from other businesses in which a company has a stake. An operating loss occurs when core business income falls short of expenses.
Operating Profit can be calculated by removing Operating Expenses, Depreciation, and Amortization from Gross Profit.
Operating profit is also known as Earnings before interest and tax (EBIT), as interest and taxes are non-operating expenses. Unlike EBIT, it does not include non-operating income.
Several extraneous and indirect factors that can obscure a company’s true performance are eliminated by operating profit. The operating profit margin demonstrates how well a company converts gross revenue to this figure.
The tax laws are very complex. Our short blog articles cannot cover in full all the nuances of the rules. Your specific facts may hold various opportunities and possible risks that only trained, experienced, and highly qualified tax specialists can spot. We encourage you to find such help, rather than trying to figure it all out on your own. Consider giving this marketplace a try by posting your project and signing up here.
If you are a licensed tax professional and are interested in helping others either part or full-time, or ad hoc, come on in! Happy to have you. Our marketplace has the full suite of tools to communicate with clients including compliance calendars, task and message management, and billing. You can also quickly connect to knowledgeable colleagues who can complement your services with the ones you do not provide. Register here.