Operating Margin

Measures profitability after all operating expenses are accounted for.

Operating Margin

Measures profitability after all operating expenses are accounted for.

Operating Margin

Measures profitability after all operating expenses are accounted for.

Formula

Operating Margin = (Operating Income / Revenue) * 100

Know your metric

Importance of

Operating Margin

  1. Profitability Gauge

Direct measure of company profitability after operating expenses.


  1. Cost Management

Reflects the effectiveness of cost management strategies.


  1. Operational Efficiency

Indicates overall operational efficiency and cost control.

Drawbacks of

Operating Margin

  1. Excludes Non-Operating Costs

Doesn’t account for taxes or interest expenses.


  1. Not Comprehensive

Provides a partial view of financial health.


  1. Affected by Accounting Choices

Can vary significantly with different accounting practices.

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