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Urgent - Operating Profit

Pandiri Ramu (Business Analyst) (613 Points)

04 October 2010

Dear Sir,

I need to calculate "Operating Profit" for a Manufacturing Company. So, please let me know whether the "Provision for Taxation" debited to Profit & Loss Account is a Operating Expenses or Non-Operating Expenses.

Awaiting for your earliest reply in this regard.

Many thanks in advance,

Ramu

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7 Replies

Vijay Kumar (article) (402 Points)
Replied 04 October 2010

Provision for taxaxtion should not be considered as an expense at all for calculating operating profit

CA AYUSH AGRAWAL (Kolkata-Pune-Mumbai) (26986 Points)
Replied 04 October 2010

Its Non Operating Profit.

Even Depreciation & Interest are Also Not Operating Expenses.

and Depreciation if Calculated on Production Basis I Mean Variable Then Only It Will Be Treat as Operating.

RAVISANKAR AMBAVARAPU (CA FINAL AND CWA FINAL) (128 Points)
Replied 04 October 2010

operating profit = ebit

Lokesh (CS professional) (493 Points)
Replied 04 October 2010

For the purpose of calculating Operating Profit only Cost of goods sold and other Operating expenses i.e Admn. exp., Selling & distributation exp. are considered.

Formula is Sales-(COGS+Admn. exp+S&D exp.)

ADITI MALIK (article assistance) (78 Points)
Replied 04 October 2010

its wl nt be included in operating profit.....its a NON OPERATING EXPENSE....

expenses incurred in operation of activity.....is operating exp. n prov for tax is that we r making provision...so its a liablity

Prachi Jindal (CA-Article-Final-Student) (129 Points)
Replied 05 October 2010

operating expenses are those expeses which are incurred in order to affect the production or business...provsion for taxation is not an expense which can be related to production directly and also it is the below the line item and not treated as operating expense.