Profitability Analysis
Break a period's results into the standard P&L waterfall — gross profit, operating profit, profit before tax and net profit — with the corresponding margins.
Data verified · July 2026
What if I don't have a separate 'other income' figure?
Leave it at zero — the calculator will base operating profit on gross profit less operating expenses only, which is correct if there is no other income to add.
Source: Companies Act 2006, Sch 1 (profit and loss account formats); standard management accounting waterfall (gross / operating / PBT / net profit). · updated 2026
Like this calculator?
Create a free account to save your calculations, access history, and export to PDF. Upgrade to Pro for all 319 calculators.
A question about this result?
Ask Solva, ActioFin's AI finance advisor — answers sourced from official texts.
5 free questions per day with a free account
Everything about Profitability Analysis
📋Overview+
This calculator walks a period's revenue down through the standard profit and loss waterfall: cost of sales removed gives gross profit, operating expenses and other income adjust that to operating profit, finance costs bring you to profit before tax, and tax gets you to net profit — each expressed both in pounds and as a margin on revenue, so you can see exactly where profitability is being eroded.
💡 Best practices
- A falling gross margin usually points to cost of sales (materials, direct labour) rising faster than price — check unit economics before overheads.
- A gap between operating margin and net margin that widens over time often signals rising finance costs — worth flagging if the business is taking on more debt.
- Compare margins across at least 2-3 periods rather than a single snapshot — a one-off item can distort a single period's figures.
🔢 Concrete example
£500,000 revenue, £300,000 cost of sales, £100,000 operating expenses, £10,000 finance costs and £15,000 tax: £200,000 gross profit (40% margin) and roughly £75,000 net profit.
📖User guide+
How to use this calculator
- 1
Enter revenue for the period.
- 2
Enter cost of sales to get gross profit and gross margin.
- 3
Enter operating expenses and any other income to get operating profit and operating margin.
- 4
Enter finance costs and tax to get profit before tax and net profit.
📚Glossary+
- Gross margin
- Gross profit expressed as a percentage of revenue — how much of each pound of sales is left after the direct cost of the goods or services sold.
- Operating margin
- Operating profit expressed as a percentage of revenue — profitability from core trading activity, before finance costs and tax.
ℹ️Sources & updates+
Last data update
July 7, 2026
Sources and references
Companies Act 2006, Sch 1 (profit and loss account formats); standard management accounting waterfall (gross / operating / PBT / net profit).
The data in this calculator is updated regularly to reflect the latest official rates. When in doubt, consult the official sources listed above.
FAQ — Profitability Analysis
What if I don't have a separate 'other income' figure?+
Leave it at zero — the calculator will base operating profit on gross profit less operating expenses only, which is correct if there is no other income to add.
Why calculate three different margins instead of just net margin?+
Each margin isolates a different layer of the business — gross margin shows product/service economics, operating margin shows core trading efficiency, and net margin shows the bottom-line result after financing and tax, so tracking all three shows where profit is being gained or lost.