- CFA Exams
- CFA Level I Exam
- Topic 4. Financial Statement Analysis
- Learning Module 11. Financial Analysis Techniques
- Subject 5. Profitability Ratios
CFA Practice Question
What is another name for operating profit?
B. Earnings before interest and taxes
C. Net income before taxes
D. Net income
A. Gross profit
B. Earnings before interest and taxes
C. Net income before taxes
D. Net income
Correct Answer: B
Another name for operating profit is earnings before interest and taxes, or EBIT.
User Contributed Comments 10
| User | Comment |
|---|---|
| Alfa1 | gross profit = EBIT |
| kalps | GOperating profit = earnings before interest and tax (EBIT) |
| vincenthuang | gross profit=EBIT= operating profit |
| tony1973 | No vincenthuang. Gross profit does not equal operating profit. |
| cbb1 | Gross Profit = Revenues less COGS, but Operating Profit = Gross Profit less AS&G. |
| kimsan | Unless one is operating under the banking industry, interest expenses can not be considered as operating expenses. |
| asianl6 | how's B and C different? only that B excludes interest? |
| dipuo | exactly that, asian! |
| nagri | Correcting asian and Dipuo B&C are differnt not only by interest but also AS&G as cbb1 has clearly explained. Gross Profit = Sales-COG Operating Profit= Sales-COG-AS&G or = EBIT |
| mordja | ahhh, think you are comparing A to B nagri. asian and dipuo are correct when comparing B to C. |