Operating profit is the profit earned through the normal operations and activities of the business. It is calculated as the excess of operating revenue over operating expenses. Essentially, it is the profit before interest and tax (EBIT).

While calculating operating profit, incomes and expenses of a purely financial nature are not taken into account. Similarly, abnormal items such as loss by fire are also excluded to reflect only the core business performance.

It is derived using the following formula: Operating Profit = Net Profit + Non-Operating Expenses – Non-Operating Incomes