How to Calculate Operating Profit

by Carter McBride; Updated September 26, 2017
Firms using operating profit to see the profitability of only the firm's operations.

Operating profit refers to a company's revenues minus its expenses only from operations. An income statement normally will include non-operating gains and losses. Operating profit does not consider any non-operating charges. For example, labor expense is operating, while a winning a lawsuit is non-operating. The difference boils down to which revenues and expenses are from the firm's basic principals of existing.

Step 1

Eliminate any non-operating revenues from the firm's income statement. Non-operating gains include items such as interest income and gain on the sale of a business segment.

Step 2

Add together the remaining operating revenues to determine the firm's operating revenue.

Step 3

Eliminate any non-operating expenses. Non-operating expenses include losing a lawsuit, interest expense, or losses from selling a plant or other assets.

Step 4

Add together the remaining operating expenses to determine the firm's total operating expenses.

Step 5

Subtract operating expenses from operating revenues to determine the firm's operating profit.

About the Author

Carter McBride started writing in 2007 with CMBA's IP section. He has written for Bureau of National Affairs, Inc and various websites. He received a CALI Award for The Actual Impact of MasterCard's Initial Public Offering in 2008. McBride is an attorney with a Juris Doctor from Case Western Reserve University and a Master of Science in accounting from the University of Connecticut.

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