To calculate operating profit, you need to subtract the company's operating expenses from its revenue.
Here's an example:
Suppose a company has the following financials for the year:
Revenue: $100,000
Cost of goods sold (COGS): $60,000
Operating expenses: $20,000.
To calculate the operating profit, you would need to subtract the COGS and operating expenses from the revenue:
Operating profit = Revenue - COGS - Operating expenses
= $100,000 - $60,000 - $20,000
= $20,000.
Therefore, the company's operating profit for the year is $20,000. In summary, operating profit is the profit earned by a company from its core business operations. It is a useful measure of the company's operational performance and can be used to assess the company's profitability.
