Operating Profit and Gross Profit

Expand your knowledge of the income statement with two important subtotals: operating profit and gross profit.

Course Progress

Course Description

In the third lesson of our "Accounting 101" series, “Operating Profit and Gross Profit,” you will deepen your understanding of financial statements by exploring two key subtotals of the income statement: operating profit and gross profit. You will learn to identify core business items that impact operating profit and understand how non-operating items are presented. Additionally, you will learn how to calculate gross profit and gross profit margin by distinguishing between the cost of goods sold and selling, general, and administrative expenses. With this knowledge, you'll be able to evaluate a company's pricing strategy and ability to scale.

By the end of this course, you will able to answer questions such as:

• Why is operating profit useful for analyzing competitors?
• How does a company’s gross profit margin affect its ability to scale?
• How do gross profit margins vary across industries?

Operating vs. Non-Operating Expenses

Common Operating Expenses

Common Non-Operating Expenses

Non-Operating Income

Visual Guide to the Multi-Step Income Statement Part 1

Math Essentials: Solving for Multiple Variables

Operating Profit Margin

COGS vs. SGA

Visual Guide to the Multi-Step Income Statement Part 2

Gross Profit Margin

Course Review

Course Quiz

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