What is operating profit

Operating profit, or trading profit, represents the profit a business makes from its core operational activities. It is calculated by deducting operating expenses, including the cost of goods sold and day-to-day running costs, from the gross income or turnover achieved through sales.

This metric stands as a pivotal indicator of a company’s profitability and efficiency over a given period, typically a financial year. It reflects the success of the company’s core business operations, before any deductions for interest payments or taxes.