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Question
What is an operating profit?
Answer in Brief
Solution
The operating profit are considered to be the profit which is earned by the business from its core business operations.
The calculation of the operating profit thus excludes interest and the taxes.
The operating profit it thus determined by the following formula:
Operating profit = Gross profit – Operating expenses – Depreciation – amortization
shaalaa.com
Operating Profit (EBIT)
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RELATED QUESTIONS
Calculate the amount of gross profit and operating profit on the basis of the following balances extracted from the books of M/s Rajiv & Sons for the year ended March 31, 2017.
| ₹ | |
| Opening stock | 50,000 |
| Net sales | 11,00,000 |
| Net purchases | 6,00,000 |
| Direct expenses | 60,000 |
| Administration expenses | 45,000 |
| Selling and distribution expenses | 65,000 |
| Loss due to fire | 20,000 |
| Closing stock | 70,000 |
Calculate the amount of gross profit and operating profit on the basis of the following balances extracted from the books of M/s Rajiv & Sons for the year ended March 31, 2017.
| ₹ | |
| Opening stock | 50'000 |
| Net sales | 11,00,000 |
| Net purchase | 6,00,000 |
| Direct expenses | 60,000 |
| Administration expenses | 45,000 |
| Selling and distribution expenses | 65,000 |
| Loss due to fire | 20,000 |
| Closing stock | 70,000 |
