Operating profit means.........................

operating profit=earning before intt & tax.(EBIT)

OPERATING PROFIT=OPERATING REVENUE-- OPERATING EXPENSES.

EBIT/PBIT is operating profit 

Operating profit is profit earned from business operations after deducting operating expenses. EBIT(Earning Before Interest and Tax) is the operating profit of the company.

well thq shivaram and nikitha.  pls explain it indetail.my doubt is.....

in my CWA books it is given like this......

                                                     Contribution

Operating Leverage Ratio  = ----------------------------------- x 100

                                                     PBIT  /  Operating profit

                                                 Net profit after tax but before interest

Return on total assets = -------------------------------------------------------- x 100

                                                                  Total assets

(Note: Net operating profit after tax but before interest is nothing but Operating profit)

These two formulas are makes me confused that  what exactly operating profit means. pls explain..........................

thq so much in advance for ur patience in clearing doubts

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).

Operating Profit = Operating Income – Operating Expenses (It includes only income from operations) (This is calculated before interst & tax, in addition to that interst is always is calculated before tax for calculating earnings for shareholders.)

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

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

I thik,if that note is given with qn &/or  no tax rate is given only then we takes operating profit as profit after tax & before intt. 

Operating leverage =Contribution /EBIT 

I think return on total assets means here Return on Investment

its Formula is EBIT/Total capital Employed

The problem is when You have to give segmentation to ROE(Return on Equity)

Return on Equity is Post  Tax so You have to recompute the Return on Investment which is arrived by the above Formula which is Pre tax to make it Post Tax 

both formula's are same................if in question tax rate given thn take operating profit (EBIT(1-tax))..........if tax rate not given thn take simply EBIT...............

Originally posted by : sivaram
	Operating leverage =Contribution /EBIT  I think return on total assets means here Return on Investment its Formula is EBIT/Total capital Employed The problem is when You have to give segmentation to ROE(Return on Equity) Return on Equity is Post  Tax so You have to recompute the Return on Investment which is arrived by the above Formula which is Pre tax to make it Post Tax

Agreee

thanks to all of u.

And what about Book Profit ?

thanks to all