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Net profit and operating profit are not the same thing for the PM exam.
In the context of financial management, net profit refers to the profit after interest and tax, while operating profit refers to the profit before interest and tax.
It is important to note that the specific definitions and usage of these terms may vary depending on the context and the exam requirements.
Sorry but I don’t know why you mention the financial management exam. I’m talking about the performance management exam. Is net profit and operating profit the same thing in the context of the performance management exam?
Net profit and operating profit are not the same thing for the PM exam.
For management accounting purposes, ” SAME AS I’VE WRITTEN ABOVE” net profit refers to the net operating profit, which is the profit from operations before interest and tax.
Operating profit, on the other hand, is the profit before deducting interest and tax expenses.
It is important to understand the distinction between these two terms when evaluating management performance.
I am still having trouble understanding what you mean. I get that they’re both the profit before interest and tax but I don’t understand what the difference is. Can you please explain with an example
Operating profit refers to the profit earned from a company’s core operations before deducting interest and taxes. It is a measure of the company’s profitability from its primary business activities.
On the other hand, net profit, also known as net income, is the profit remaining after deducting all expenses, including interest and taxes, from the total revenue.
It represents the overall profitability of the company. While operating profit focuses on the operational performance, net profit reflects the final profit after considering all expenses and income.
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