Operating Profit Calculator

Formula

The formula to calculate the Operating Profit is:

\[ \text{OP} = \text{R} - \text{OC} - \text{COGS} \]

Where:

$ \text{OP} $ is the Operating Profit ($)
$ \text{R} $ is the total revenue ($)
$ \text{OC} $ is the operating costs ($)
$ \text{COGS} $ is the cost of goods sold ($)

What is Operating Profit?

Operating profit is the profit earned from a firm's core business operations, excluding deductions of interest and tax. It is calculated by subtracting the cost of goods sold (COGS) and operating costs (OC) from the total revenue (R). This metric is crucial for assessing the efficiency and profitability of a company's primary business activities.

Example Calculation

Let's assume the following values:

Total Revenue ($ \text{R} $): $100,000
Operating Costs ($ \text{OC} $): $30,000
Cost of Goods Sold ($ \text{COGS} $): $40,000

Step 1: Subtract the operating costs from the total revenue:

\[ 100,000 - 30,000 = 70,000 \]

Step 2: Subtract the cost of goods sold:

\[ 70,000 - 40,000 = 30,000 \]

Therefore, the operating profit is $30,000.