Operating Margin
Content
Definition
Operating Margin is a profitability ratio calculated as operating income divided by net sales, showing the efficiency of a company`s core business.
Usage and Context
Frequently asked questions
- What is operating margin calculated as? Operating margin is calculated as operating income divided by net sales, showing the percentage of revenue left after covering operating expenses.
- Is the operating margin a profitability ratio? Yes, operating margin is a profitability ratio that indicates the efficiency of a company`s core business operations in generating profit.
- What is the formula for operating profitability ratio? The formula for the operating profitability ratio is operating income divided by net sales, expressed as a percentage.
Benefits
Operating margin provides insights into a company`s operational efficiency, helping stakeholders evaluate its ability to generate profit from core activities.
Conclusion
Operating Margin measures the efficiency of a company`s core business in generating profit, calculated as operating income divided by net sales.
