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Gross Operating Profit Percentage Formula:
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Gross Operating Profit Percentage (GOP%) is a key financial metric that measures the percentage of revenue remaining after deducting the cost of goods sold and operating expenses. It indicates how efficiently a company is managing its core operations.
The calculator uses the Gross Operating Profit Percentage formula:
Where:
Explanation: This ratio shows what percentage of each dollar of revenue is retained as operating profit after covering all operating expenses.
Details: GOP% is crucial for assessing operational efficiency, comparing performance across companies and industries, and identifying trends in profitability. Higher percentages indicate better operational management and cost control.
Tips: Enter Gross Operating Profit and Revenue in USD. Both values must be positive, with Revenue greater than zero for valid calculation.
Q1: What is a good GOP percentage?
A: This varies by industry, but generally 15-20% is considered good, while above 25% is excellent. Service industries typically have higher margins than manufacturing.
Q2: How does GOP differ from net profit?
A: Gross Operating Profit excludes taxes, interest, and non-operating items, focusing purely on operational efficiency, while net profit includes all expenses.
Q3: Why is GOP percentage important for investors?
A: It helps investors assess a company's core operational profitability and compare efficiency across similar companies, independent of financing and tax strategies.
Q4: Can GOP percentage be negative?
A: Yes, if operating expenses exceed revenue, indicating operational inefficiency or financial distress in core business activities.
Q5: How often should GOP percentage be calculated?
A: It should be calculated quarterly and annually to track operational performance trends and identify areas for improvement.