Explaining operating profit

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

Are you ready to have an easier and more rewarding relationship with your numbers?  My book, I Hate Numbers helps you get there.

This book is based on my 27 + years in business, helping thousands of businesses survive and prosper.  It is an easy, humorous but serious read about running a business, having a financially rewarding relationship with your numbers, Furthermore, my book will help with that battle between the ears, that all business owners experience.

Get in touch with us to help make your life easier and stress-free. Contact us if you need help figuring out and sorting your numbers, creating your future financial story plans, your tax, payroll and other accounting and business matters