What's the difference between gross profit and operating profit?
submitted by Polly Esther

Rayon

Gross profit is sales minus the cost of making what you sold.

Operating profit is what's left after you pay for operating costs like wages and rent. Basically, gross profit looks at production costs, and operating profit looks at all the day-to-day expenses.

Nigel already has Plans

Gross profit is what you get after subtracting the cost of goods sold from sales revenue. Operating profit takes it a step further. It subtracts operating expenses like salaries, rent, and utilities from gross profit. So, operating profit shows how profitable the core business is before considering things like interest and taxes.

go_yell_it_on_mtn

Gross profit = Sales - COGS

Operating profit = Gross profit - Operating expenses (like salaries, rent, utilities)

So, gross profit shows profit from sales after production costs, while operating profit shows profit after all operating costs are paid.