Operating Margin (%) = Operating Profit ÷ Revenue × 100
What It Measures
Operating margin is a metric that shows how efficiently a company generates profit from its core business, such as selling products or services. It expresses, as a ratio to revenue, the level of profit remaining after deducting costs such as cost of goods sold, personnel expenses, and selling, general and administrative expenses.
Difference from Ordinary Income Margin and Net Margin
While operating margin shows the earning power of the core business alone, ordinary income margin also reflects non-operating income and expenses (such as interest received and interest paid), and net margin reflects the final earning power including extraordinary gains/losses and taxes. Checking all three together makes it easier to understand at which stage profit is increasing or decreasing.