Finance and accounting
EBIT and operating profit
Profit from operations, before interest and tax.
Facts checked against sources onWhat does EBIT and operating profit mean?
Operating profit is revenue minus COGS minus operating expenses, including depreciation and amortization. EBIT means earnings before interest and taxes and is often used to mean the same thing, although the two can differ when a company has one-off or non-operating items. Operating margin is operating profit divided by revenue.
Where does it come up in case interview prep?
- The profit and loss statement, line by lineLesson in Business basics for non-business learners
- What competitive advantage really isLesson in Why some businesses win: competitive advantage and the economics of strategy
- How the three statements link: one company through all threeLesson in Reading a business through its numbers: the three statements, cash and value
- EBITDA versus operating profit versus free cash flowLesson in Reading a business through its numbers: the three statements, cash and value
- Return on capital against its cost: ROIC and WACC in plain wordsLesson in Reading a business through its numbers: the three statements, cash and value
- Reading a real results release: Inditex, FY2025Lesson in Reading a business through its numbers: the three statements, cash and value
- Profit and lossLesson
Related terms
- EBITDAEarnings before interest, taxes, depreciation and amortization.
- Net incomeProfit after every cost, including interest and tax.
- Opex (operating expenses)Running costs that are not part of COGS.
- ProfitThe money left over after costs. Revenue minus cost.
- RevenueMoney earned from sales, before costs.
- CostWhat it takes to make and sell the product in a period.
- Fixed costA cost that stays the same when volume changes, within a normal range.
- Variable costA cost that rises and falls with how much you make.
Learn it in context
See EBIT and operating profit at work in a lesson from Business basics for non-business learners, with checks as you go.
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