Operating profit and net profit are both critical measures of a company’s financial performance, but they reflect different aspects of profitability.

Operating Profit (also called EBIT - Earnings Before Interest and Taxes) is the profit earned from a company’s core business operations, excluding interest and taxes. It is calculated as:
Gross Profit – Operating Expenses (e.g., salaries, rent, utilities, depreciation).
Operating profit indicates how efficiently a company generates profit from its primary activities before financing and tax considerations.

Net Profit (or Net Income) is the final profit after deducting all expenses, including operating costs, interest, taxes, and other non-operating items (e.g., one-time charges, investment gains/losses). It is derived as:
Operating Profit – (Interest + Taxes + Other Non-Operating Expenses).
Net profit represents the company’s total earnings and is used to determine profitability for shareholders.

Key Differences
Scope – Operating profit focuses only on core business efficiency, while net profit includes all financial impacts.

Tax & Interest – Operating profit excludes them; net profit accounts for them.

Investor Insight – A high operating profit but low net profit may indicate heavy debt or tax burdens.

Understanding both helps assess operational efficiency and overall financial health.