Operating Margin

Operating Margin is a profitability ratio that measures the proportion of a company’s revenue that remains after covering operating expenses, such as wages, rent, and cost of goods sold, but before interest and taxes. It provides insight into a company’s operational efficiency and profitability.

Formula: Operating Margin = (Operating Income / Revenue) × 100

A higher operating margin indicates efficient management and strong profitability from core business activities, while a lower margin signals potential inefficiencies or cost control issues.