NET OPERATING PROFIT

Net operating profit is the profit a company is left with after subtracting for cost of goods sold, operating expenses, interest and taxes. It is calculated on the profit and loss statement.

Net operating profit = Revenue – (discounts, rebates and returns) = gross profit – (operating expenses) = Operating profit – (interest, taxes and other unusual expenses). With this value, you can calculate the net operating margin simply by dividing it by the total value of the sales made.