Operating Earnings

Posted in Finance, Accounting and Economics Terms, Total Reads: 322
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Definition: Operating Earnings

Operating earnings is a metric to measure profitability. Operating Earnings are earnings which are left after accounting for operating expenses and costs.

The formula :

Operating Earnings = revenue - operating costs-operating expenses


EXAMPLE : 

Revenue

₹2,000,000

Cost of Goods Sold

₹600,000

Wages

₹400,000

Other operating expenses

₹60,000

Using this information and the formula above, we can compute the operating earnings of company ABC to be:


Operating Earnings = ₹2,000,000 - ₹600,000 - ₹400,000 - ₹60,000 = ₹940,000


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