Earnings before interest & tax (EBIT). The Operating Profit Calculator takes revenue, cost of goods sold, operating expenses and returns operating profit (ebit) plus operating margin, gross profit. Results update as you type, and the formula is shown under the result so you can repeat it in your own spreadsheet.
Margins tell you where the money goes between revenue and profit. Track each margin over time and against similar businesses; a falling margin while revenue grows is the signal to investigate. Use the worked example below to check the maths against your own figures.
How the Operating Profit Calculator works
Operating profit shows what the core business earns before financing and tax decisions. It is the profit figure most comparable between companies.
Worked example
With the example values (revenue of $500,000, cost of goods sold of $300,000, operating expenses of $120,000), the operating profit (ebit) is $80,000.00; operating margin 16%, gross profit $200,000.00. Change any figure above and the result updates immediately; use Copy results to paste the summary into a note or email.
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Frequently Asked Questions
How is operating profit (ebit) calculated?
operating profit = revenue − cost of goods sold − operating expenses.
Which figures do I need?
Revenue, cost of goods sold, operating expenses. Take them from the same period and the same set of accounts or reports so the ratio is consistent, and check the example values as a guide to the units expected.
What is a good margin?
It depends on the industry: grocery and distribution run on low single-digit net margins, software and services on 20% or more. Compare with similar businesses and watch your own trend.
