How to Calculate Operating Profit

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Firms using operating profit to see the profitability of only the firm's operations.
Firms using operating profit to see the profitability of only the firm's operations. (Image: calculator image by L. Shat from Fotolia.com)

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.

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.

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

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

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

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

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