Explaining operating profit is this weeks I hate Numbers podcast. Operating profit is a performance measure that tells you how much money your business earned from its core operations. It’s a figure that business often overlook when it comes to budgeting and long-term planning.
But understanding your operating profit is essential if you want to make the most of your resources. This podcast breaks down some key points about operating profit and gives examples of how you can use this information for your business or organisation.
So, what exactly is operating profit?
Quite simply, it’s a measure of all the revenue generated from a company’s primary activities, minus all the associated costs. This includes things like the cost of raw materials, labour, factory overheads, and marketing expenses.
Operating profit is therefore a more accurate measure of a company’s profitability from its ongoing activities. And it’s this figure that managers should focus on when making decisions about where to allocate resources.
So, next time you’re looking at your company’s financial statements, take a closer look at the operating profit figure. It will give you a better idea of how your business is performing
Good to know
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