Answer / yetandra

The profit earned from a firm's normal core business
operations. This value does not include any profit earned
from the firm's investments (such as earnings from firms in
which the company has partial interest) and the effects of
interest and taxes.

Also known as "earnings before interest and tax" (EBIT).

Calculated as:

Operating Profit = operating revenue - operating expenses

Answer / ashish shrivastava

when the company earn profit from their normal business
transaction that is operating profit. many company do the
business with manufacturing unit or without manufacturing
unit so they prepare their books of accounts with or
without manufacturing a/c and many companies prepare
trading a/c after that they perpare P&L Account and get the
net profit from this account and that is also called EBIT
after that they deduct from it Interest on debenture and
TAX of the company so after that they can get the actual
operating profit.

Answer / inderdeep

Amount remaining after deducting all the operating expences from the revenue is operating profit.
It is also known as EBITDA

Answer / praveen

For example, suppose ABC Printing Company earns $50 million from its core printing related operations, $10 million from its 40% stake in XYZ Corp. and $3.5 million from interest earned in its money market and bank accounts. In addition, the company spends $10 million in production related costs.

Overall, the company's operating profit is $40 million. This is calculated as the $50 million in operating revenue million minus the $10 million in production costs. The other $10 million and $3.5 million in earnings are not included in operating income because they are investment income.

Explain how ratios may be used to assess the profitability and liquidity of a business

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