Operating profit

Operating profit, often referred to as earnings before interest and taxes (EBIT), is a financial indicator signifying a company's earnings generated from its primary business activities. It is calculated by subtracting operating expenses, such as wages, rent, and utilities, from the gross profit.

Unlike gross profit, operating profit excludes non-operating elements like investment gains or losses, interest income, and interest expenses. This metric is typically located in the income statement section of a company's annual report and provides insights into the profitability of its core operations.

The formula for determining the operating profit is the following:

Operating Profit = Gross Profit - Operating Expenses

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