Rekstrarhagnaður

Rekstrarhagnaður, or operating profit, is the profit earned from a company’s normal business activities before interest and taxes. It reflects how efficiently the core operations generate earnings, independent of financing arrangements and tax considerations.

Calculation typically involves subtracting operating expenses from operating revenues. Rekstrarhagnaður is calculated as rekstrartekjur minus rekstrargjöld, where rekstrargjöld includes items such as the cost of goods sold, selling, general and administrative expenses, and depreciation and amortization. It excludes interest income and expense, taxes, and gains or losses from investments or asset disposals. In many reports, depreciation and amortization are embedded within rekstrargjöld, contributing to the final rekstrarhagnaður figure.

Relation to other measures: Rekstrarhagnaður is closely aligned with EBIT (earnings before interest and taxes) in many accounting contexts. Gross profit measures revenues minus the cost of goods sold, while rekstrarhagnaður subtracts operating expenses from revenue to show operating income. Net profit includes financing items and taxes. Accounting practices can cause slight differences in what is included in operating expenses, so comparability should consider the applicable framework.

Usage and limitations: Analysts use rekstrarhagnaður to assess the profitability and operating efficiency of a company’s core business, and to compare performance across periods and peers. It does not reflect financing effects, tax environments, or non-operating items, nor does it indicate cash flow, so it should be considered alongside other indicators such as net profit and operating cash flow.