Operating Profit

Operating profit, also known as operating income, is the profit a company generates from its core business operations after subtracting operating expenses such as wages, rent, and cost of goods sold (COGS) but before deducting interest and taxes. It is a key measure of a company’s profitability and operational efficiency, reflecting how well a company controls its costs while generating revenue.

Example

A company reports $1 million in sales and incurs $700,000 in operating expenses, resulting in an operating profit of $300,000 before interest and taxes.