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Finance

Operating Margin

Also known as operating profit margin

What percentage of revenue is left after paying both the cost of the product and the cost of running the business.

Example

₹10L revenue with ₹9L of total running costs is a 10% operating margin.

Formula

Operating Margin = Operating Profit ÷ Revenue × 100

Related terms

EBITDA
A measure of a company's core operating profit, before accounting effects like interest, tax and asset write-downs. It shows how the business does at its heart.
Gross Margin
The share of each sale left over after the direct cost of making it — before overheads. Higher margins give you more room to grow.
Net Margin
The percentage of revenue you actually keep after every single cost, including tax and interest. The true bottom line.

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