Operating Profit can be defined as the profit earned by carrying the normal business activities. It is computed by subtracting the operating expenses from the gross profit. Algebraically, it can be written as
Operating Profit = Gross Profit – Operating Expenses
Gross Profit is the excess of net sales during an accounting period over the cost of goods sold. Operating expenses are the expenses that are incurred during the normal course of business activities. It is consists of administrative and office expenses and selling and distribution expenses, depreciation, bad debts, etc. Operating profit can also be written as
Operating Profit = Net Sales – (Cost of Goods Sold + Operating Expenses) or
Operating Profit = Net Profit+ (Non-operating Expenses- Non-operating Incomes)
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What is a Promissory Note?
A promissory note is an unconditional promise in writing given by the buyer (or creditor) to the seller (or debtor) to pay the amount of money specified therein to the seller or to the order of seller or to bearer.