Operating Profit (redirected from operating profits)

Operating profit (or loss)

Revenue from a firm's regular activities less costs and expenses and before income deductions.

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operating profit

See operating income.

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Operating Profit

What Does Operating Profit Mean?

The profit earned from a firm's core business operations. It does not include profit earned from the firm's investments (such as earnings from firms in which the company has a partial interest) and the effects of interest and taxes. Also known as earnings before interest and taxes (EBIT). It is calculated as shown here:

Investopedia explains Operating Profit

As an example, suppose ABC Printing Company earns $50 million from its core printing-related operations, $10 million from its 40% stake in XYZ Corp., and $3.5 million from interest earned in its money market and bank accounts. In addition, the company spends $10 million in production-related costs. Overall, the company's operating profit is $40 million. This is calculated by subtracting the $10 million in production costs from the $50 million in operating revenue. The other $10 million and $3.5 million in earnings are not included in operating income because they are investment income.

Related Terms:
• Inventory Turnover
• Operating Expense
• Operating Income
• Operating Margin
• Revenue