Operating Margin

Operating Margin is an accounting term which refers to the efficiency of the operations of a company and shows the profit of a company after operating expenses have been taken into account but before interest and taxation. 
The calculation for Operating Margin is simply Operating Income divided by Net Sales. Essentially, Operating Margin is the profit made per dollar on all its sales. For example, an Operating Margin of 5% means the company makes $0.05 profit excluding taxation and interest) on every $1 worth of sales.

Free Resources

To continue learning and advancing your career, check out these additional helpful WSO resources:

• Retained Earnings
• Fraud Triangle
• Accounts Receivable Turnover Ratio
• Marginal Cost Formula
• Nash Equilibrium