What It Measures
Ordinary income is calculated by adding non-operating income, such as interest and dividends received, to operating profit, and then subtracting non-operating expenses such as interest paid. Ordinary income margin shows what proportion of revenue this ordinary income represents, measuring earning power that reflects both the core business and the effects of financing activities.
Difference from Operating Margin
While operating margin represents the earning power of the core business alone, ordinary income margin also factors in items such as the interest burden on borrowings. A large gap between operating margin and ordinary income margin suggests that financing activities are having a significant impact on profit or loss, and it can be useful to check what is driving that gap.