An entity’s operating profit (OP) that reflects an entity’s gross revenue (gross earnings or gross profit) net only of all relevant operating expenses. Net operating profit (NOP) results from setting operating profit against operating expenses, with all other types of “non-operating” expenses not excluded.
Net operating profit gauges operational performance of an entity, that is, it performance related to its core operations (the value proposition on which it operates and is in business). This is particularly what sets this measure of profit apart from another measure called net profit (NP). In fact, net operating profit has to do with recurring business profitability, before the impact of taxes and capital structure.
As it does not take into account (i.e., it is not net of) taxes (T) and interest expenses (I), it is also known as earnings before interest and taxes (EBIT).
Net operating profit is also known as net operating income (NOI).
