What is the relationship between operating profit, total profit and net profit
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Q: operating profit, what is the relationship between the total profit and net profit?
A: The different levels of profit in the income statement were as follows: operating profit, total profit and net profit.
Operating profit = revenue - operating costs - Business tax and surcharges - selling costs - administrative expenses - financial costs - impairment losses + fair value gains (- change in fair value loss) + investment income (- investment losses)
According to the provisions of Accounting Standards for Business Enterprises, the profit is an enterprise operating results of an accounting period, including the net profit after income minus expenses, gains and losses recognized directly in profit for the period and so on. The formula of the total profit as follows:
Total profit = Operating profit + operating income - operating expenses
Total profit is a very important economic indicator of business performance.
Net profit refers to the total profit after tax required to pay the company's retained earnings, also commonly referred to after-tax profit or net income. Net profit is calculated as follows:
Net profit = Gross profit - Income tax expense
Net profit is the ultimate operating results of a business, and more profit, the business benefits like; small net profit, the company's operating efficiency poor, which is the main indicator of operating efficiency of an enterprise.
1 , the main operating margin = operating income - the main business cost 2 , main business profit = revenue - the main business costs - the main business tax and surcharges 3 , main business profit = Operating profit + Other operating profit - operating expenses - administrative expenses - financial costs 4 , total profit = operating profit + investment income + subsidy income + operating income - operating expenses 5 , net income = gross profit - income tax total profit refers to profit before tax, which is the enterprise in a certain period before income tax operating results of total activities. All in all views by income, total profit of enterprises, including the main business profit (sales profit), profit from other operations, net investment income and net operating income of four parts. Where the profit on sales equal to sales revenue minus cost of goods sold, sales expenses and sales tax and surcharges; Other operating profit is the difference between other operating income and other operating expenditures; investment income is equal to net investment income minus investment losses; operating net income is equal to operating income minus operating expenses. Profit on sales plus other operating income minus administrative expenses and financial costs constitute operating profit (according to current operating point of view, operating profit plus net investment income on the formation of the total profits of the enterprise), operating profit plus net investment income, non-operating net income and prior period adjustments on the final form of the total profits.