don t confuse operating profit with gross profit as the two are very different concepts gross profit is the total revenue of a company minus the expenses directly related to the production of goods for sale such as the cost of goods sold companies report their gross profit on their income statement you can calculate gross profit as follows 
derived from gross profit operating profit reflects the residual income that remains after accounting for all the costs of doing business remember that operating profit is an accounting metric for the stakeholders who care about the operational profitability of the company earnings before interest taxes depreciation and amortization ebitda on the other hand is a cash focused metric for stakeholders who care about the cash flow of the business ebitda takes operating profit and adds back interest depreciation and amortization here s how it s calculated net profit is the profit remaining after all costs incurred in the period have been subtracted from revenue generated from sales expenses that factor into the calculation of net income but not operating profit include payments on debts interest on loans and one time payments for unusual events such as lawsuits additional income not counted as revenue is also considered in the calculation of net income and includes interest earned on investments and funds from the sale of assets not associated with primary operations example of operating profitwalmart wmt reported operating income of 27 01 billion for its fiscal year 2024 total revenues net sales as well as membership and other income were 648 12 billion 1 these revenues came from sales across walmart s global umbrella of physical stores including sam s club and its e commerce businesses 2meanwhile the cost of sales or cogs and operating selling general and administrative expenses totaled 490 14 billion and 130 97 billion respectively 1