operating profit (EBIT)

Also called: EBIT, operating income

Gross profit minus operating expenses, before interest and taxes: what the business itself earns.

Operating profit is gross profit minus operating expenses and depreciation and amortization: what the business itself earns from its operations, before interest on loans and before taxes. It is often called EBIT (earnings before interest and taxes) or operating income. Divided by revenue, it gives the operating margin.

Because it stops before interest and taxes, operating profit compares businesses with different debts and tax situations. It sits one step below EBITDA, which also leaves out depreciation. EBITDA is handy for comparing companies that own very different amounts of equipment, but it pretends that worn-out laptops and servers never need replacing. Operating profit counts that wear.

A single operating profit figure can mix revenue that will repeat with revenue that won't: a one-off deal, a release of unused prepayments, a reversed provision. When a board or an investor asks whether profit is sustainable, show operating profit with and without such lines.

Example

Klasna's autumn 2026, in UAH:

	September	October	November	Quarter
Operating profit	352,306.25	593,251.50	759,141.25	1,704,699
Expired lessons in revenue	277,700	188,460	163,150	629,310
Operating profit without them	74,606.25	404,791.50	595,991.25	1,075,389

The quarter: EBITDA 1,758,699 − depreciation 54,000 = 1,704,699, an operating margin of 1,704,699 ÷ 6,832,760 = 24.95%. Up every month, but September was the first month packages ever expired. Without that line September's profit is a fifth of the headline, and the quarter's margin is 1,075,389 ÷ 6,832,760 = 15.74%.

Common mistakes

Leading with EBITDA alone. Equipment wears out and has to be bought again; show operating profit too.
Treating one-off revenue as recurring. Split out lines that may not repeat.
Confusing it with net profit. Interest and taxes still come below it.
Reading it as cash. Prepayments, invoices and equipment purchases move cash on their own schedule.

Learn it in the course

How to read a P&L, top to bottom · How to read a profit and loss statement: revenue, cost of revenue, gross profit, operating expenses, EBITDA and operating profit, and what the P&L doesn't tell you.
Driver-based forecasting · Driver-based forecasting: revenue and profit from learners, lessons, price and payout instead of last year plus ten percent.
Profit is not cash: net income vs cash flow · Net income vs cash flow, month by month: how accruals, prepayments, invoices and equipment make the P&L and the bank disagree, and how to get from one to the other.
Break-even point in units and margin of safety · Break-even point in units: how many lessons a month cover the fixed costs, and how far sales can fall before a loss.
Case: a board report for a new board member · A board report on the quarter: rebuild Klasna's autumn P&L from raw lines, separate what will repeat from what won't, and back the memo with numbers.