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To calculate the operating margin, divide operating income (earnings) by sales (revenues).
Operating Profit Margin is a profitability or performance ratio that reflects the percentage of profit a company produces from its operations before subtracting taxes and interest charges. It is calculated by dividing the operating profit by total revenue and expressing it as a percentage.
Operating Margin can be seen as a measurement of how well a company is able to pay its non-operating expenses. How is Operating Margin calculated? Operating Margin is calculated by dividing a company's Operating Income into its Net Sales.
A company's operating profit margin shows how well a company turns gross revenue into this figure. Investopedia / Sydney Saporito Formula and Calculation of Operating Profit
The operating profit margin formula consists of dividing a company’s operating income (i.e. EBIT) by the revenue generated in the same period, as shown below. Operating Margin (%) = EBIT ÷ Revenue
The formula for operating margin is: Net sales – (cost of goods sold + SG&A) / Net sales x 100% = Operating profit margin. Operating margin, also known as operating profit margin or return on sales, represent how much money a company earns at the end of the day.
The operating profit margin is calculated by dividing the operating profit by net sales and multiplying it by 100 so as to retain a percentage. Investors look for the operating profit margin to gauge the actual operational efficiency of the company and understand its profitability.
Operating profit margin is a profitability ratio used to determine the percentage of the profit the company generates from its operations before deducting the interest and taxes. It is calculated by dividing the operating profit of the company by its revenue and multiplying the result by 100.
Operating margin, or operating profit margin, is defined as the operating profit divided by its revenue or sales. It helps investors to assess how much profit the business is able to retain through its operation. The higher the margins, the more profit the business is able to retain.
Using this information and the formula above, we can calculate Electronics Company XYZ's operating margin by dividing $4,000 (operating earnings) by its $30,000 (revenue). $4,000 / $30,000 = 0.13 or 13%