About Operating Profit Calculator (Formula)
An operating profit calculator is a tool used to determine the operating profit of a business or company. It assists in evaluating the profitability of core operations by subtracting operating expenses from operating revenue.
The formula for calculating operating profit is as follows:
Operating Profit = Operating Revenue – Operating Expenses
To calculate the operating profit, you need to subtract the total operating expenses from the total operating revenue. Operating revenue refers to the income generated from the primary activities of the business, such as sales of goods or services. Operating expenses include costs directly associated with those activities, such as wages, rent, utilities, raw materials, and marketing expenses.
For example, let’s say a company has operating revenue of $500,000 and operating expenses of $300,000. The operating profit would be calculated as follows:
Operating Profit = $500,000 – $300,000 = $200,000
In this case, the company has an operating profit of $200,000.
The operating profit calculator provides a valuable metric for assessing the financial performance of a business’s core operations. It helps business owners, managers, and investors understand the profitability and efficiency of the company’s primary revenue-generating activities.