Frequently Asked Questions(FAQ)

Is the operating profit margin the same as the profit margin?

The term “profit margin” could refer to operating profit margin, gross profit margin, or net profit margin. Albeit they are related, these are three different metrics used to gauge a company’s profitability.

Are operating profits the same as EBIT?

Yes, operating profit is the same as EBIT, or Earnings Before Interest and Taxes.

What’s more important: operating profit or net profit?

Both the concepts of operating profit and net profit are important in different ways. Operating profit helps to evaluate a company’s earnings after covering operational expenses. Net profit shows how much a company earns after accounting for taxes and interest along with operational expenses.

How can you improve your operating profit margin?

Operating profit margin can be improved through more efficient use of resources, better management controls, more effective marketing, and improved pricing.

About the Authors

Tetiana Sitiugina-Babiuk

Written by: Tetiana Sitiugina-Babiuk

Financial Sector Specialist and Content Strategist

Independent writer, content strategist, and financial sector specialist. Tatiana has an extensive experience in working with financial institutions such as Bank of Canada and Risk Management unit at FinDev Canada. She holds an MA in Financial Risk Management from the University of Toronto.

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More About Glossary of Common Financial Terms

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