The mathematical formula for Operating
Profit is simply Gross Profit minus Departmental
Expenses.
Example:
A) Departmental Gross Profit = R107,539 B) All Departmental Expenses = R82,722 C) Operating Profit = R24,817 (A - B)
Discussion:
Operating profit is usually seen as the last line or the bottom line of your
financial reports for the Parts Department, hence its colloquial name,
"the bottom line".
However, having this figure reported as a
monetary value is very nice to see, but in terms of plotting its trend,
it is more useful to measure this as a percentage of Turnover.
Example:
A) Operating Profit = R24,817 B) Turnover = R165,446 C) Operating Profit % = 15% (A รท B X 100)
Related Terminology:
This line is sometimes called Direct Profit, Operating Profit and of course the
bottom line.