Operating Profit and Net Profit: Measurements of Profitability

Abstract

This paper begins by describing the main concepts which the research problem of this study is derived. This description of operating profit then leads onto an empirical review, with a view of discovering areas of existing literature that are focusing on evaluating the phenomena in concern. Accordingly, the chapter begins with an explanation of the operating profits and from here the chapter moves on to describe the net profit in organizations. It addresses what the net profit is. How the net profit is calculated also described drawing on existing literature. This discussion on context then leads to the components of net profit. Here it attempts to identify the relationship between operating profit and net profit for the year. As such they are drawn out as the main themes around which the paper builds its framework.