Operating Ratio

finance a la shmoop.what are gross profits operating profits and net

profits? well the greatest fishing company that walks the earth or swims

the ocean made a fortune last year from selling nets. catching things like well [fish is caught from the ocean]

me. but that's really a different thing and no Bueno. leave us alone. in an

accounting sense net profits come after operating profits that come after gross

profits .and the net thing is well pretty much taxes. so here's an income statement

yeah yeah revenues and then there's the cost of the stuff you're selling. okay

fine. we'll note the nets only cost a little bit to make and you sell them for

a fortune .way overpriced if you ask me. like whatever happened to line fishing

anyway lazy humans. so you have your revenues then your cost of goods sold.

all right well if you subtract those cogs from the revs you get your gross [income statement pictured]

profits. yeah gross just gross and sad frankly like why not eat more chicken

seriously. anyway .so then you have your costs of operating the business you know

overhead. secretaries and insurance and rent and fish-smell deodorizer. and then

you have operating profits after you subtract. them yep you subtract those

right from gross profits. get operating. so you made some number let's call it 10

million bucks why not .you know how many of my brethren died to give you that

money right? blood money. talk to Leo to see about it.

maybe he'll make a movie . anyway let's say the tax rates 30% well you'd pay 3

million in taxes on that 10 million of operating profit to then have net

profits of seven million dollars. lots of profits .there people. yeah hope you can [equation]

sleep at night.