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Operating Margin

 

Retirement Business Operating Margin Calculator

[CP_CALCULATED_FIELDS id=”12″] Operating Margin Explanation

Formula

Operating Margin = Operating Income / Net Sales

Operating Margin is a measurement of what proportion of a company’s revenue is left over, before taxes and other indirect costs (such as rent, bonus, interest, etc.), after paying for variable costs of production as wages, raw materials, etc. A good operating margin is needed for a company to be able to pay for its fixed costs, such as interest on debt. A higher operating margin means that the company has less financial risk.

Operating margin can be considered total revenue from product sales less all costs before adjustment for taxes, dividends to shareholders, and interest on debt.


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