Looking through the balance sheets of a company and I don't really understand what's the different between operating profit and EBIT - aren't they the same thing?

Perhaps I can give a take on this from Leonard...

Some financial statements may define Operating Profit differently I think, but my search on Investopedia showed that Operating Profit is more related with Earnings Before Interest and Taxes (EBIT) , rather than EBITDA.

The reason why Operating Profit may be viewed as EBIT is because D&A expenses, although non-cash in nature, are indeed part of your operating expenditure. D&A implicitly accounts for Capital Expenditures because expenditures on fixed assets such as property and machines depreciates not just in financial value, but also in their ability to function as well as before (machines get old, rusty, outdated etc).

Warren Buffet, dislikes EBITDA because it does not account for capital expenditures. In his 1986 shareholder he said, "Does management think that the tooth fairy pays for capex?"

In any case, different financial statements may classify these terms differently, so it'll be best to check what the term represents on the financial statements.

Also, Operating Profit may be different from EBIT because EBIT might include income from a company's investments, and so they are not the core operating activities of the business. This differs across accounting standards so it's best to look at the income statment and see from there.

Hey Anon! Happy to share what I know with you:)

Operating profit is basically Revenues- Operating expenses (which includes things like COGS , general expenses and other company specific costs). Operating Profit is also referred to as EBITDA, which basically reflects Depreciation and Amortization(DA) for the financial year. In short, your assets depreciate over their useful lifespan and your debt loans and mortgages must be amortized.

EBIT- already factors in D&A and therefore EBIT's value is always smaller than EBITDA. Therefore they are not the same thing!