How to Calculate Business Operating Profit

Finding a company's operating profit requires a simple calculation.

The operating profit of a company is a measure of its profitability before it has to pay interest for any debt that it might have and before it pays any taxes that it owes to the government. Operating profit is often called EBIT, or earnings before interest and taxes.

Things You'll Need

• Company financial statements

Instructions

1. Locate the company's income statement.

2. Look at the top to find the total sales number that the company has generated in a particular period. For example, the company might have made $100 million in sales in a given year.

3. Find all of the expenses listed below the sales number in the income statement.

4. Add these expenses up. For example, the expenses might total $65 million.

5. Do not count interest or tax expenses.

6. Subtract $65 million from $100 million, which equals $35 million. This means the company has an operating profit of $35 million.

References

• Value Based Management: Earnings Before Interest and Tax