How this calculator works
Gross profit removes the cost of goods sold from revenue. Operating profit then removes other operating expenses, such as rent or administrative wages. All inputs must cover the same accounting period and currency. Do not count goods cost again in operating expenses. Interest and income tax are excluded, and losses are valid.
Formula
Gross profit = R - C; operating profit = R - C - E. R is revenue, C is matching cost of goods sold and E is other operating expenses. The second result is operating profit before interest and income tax.
Worked example
Revenue of $10,000 less $6,000 goods cost gives $4,000 gross profit. Subtracting $2,500 of operating expenses leaves $1,500 operating profit. With no revenue, $100 goods cost and $200 expenses produce a $300 operating loss.
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Frequently asked questions
Is operating profit the same as net income?
No. Net income may also include interest, income tax and other non-operating items. They are outside this calculation.
Can I compare monthly and annual amounts?
Use one period for all inputs. Mixing annual revenue with monthly costs would overstate profit.
What if I have no operating expenses?
Enter zero. Operating profit then equals gross profit, still before interest and income tax.