Operating margin
Also called: EBIT margin, operating profit margin
Operating profit as a percentage of revenue. It shows how much of each ₹100 of sales is left after all operating costs.
Operating margin = operating profit ÷ revenue × 100. Comparing it over time shows whether a company is becoming more or less efficient; comparing it with similar companies shows relative strength.
Example
Operating profit of ₹170 crore on revenue of ₹1,200 crore is an operating margin of about 14.2%.
Learn more in these lessons
- Profit margins and what they revealWhat do profit margins tell you about a company?
- Operating leverageWhy do some companies' profits swing much more than their sales?
Related terms
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