| Operating Margin Operating margin is a margin ratio used to measure a company's pricing strategy and operating efficiency.
Operating margin is a measurement of what proportion of a company's revenue is left over after paying for variable costs of production such as wages, raw materials, etc. It can be calculated by dividing a company's operating income (also known as "operating profit") during a given period by its net sales during the same period. "Operating income" here refers to the profit that a company retains after removing operating expenses (such as cost of goods sold and wages) and depreciation. "Net sales" here refers to the total value of sales minus the value of returned goods, allowances for damaged and missing goods, and discount sales.
Operating margin is also often known as "operating profit margin," "operating income margin," "return on sales" or as "net profit margin." However, "net profit margin" may be misleading in this case because it is more frequently used to refer to another ratio, net margin.
Breaking It Down: Operating margin gives analysts an idea of how much a company makes (before interest and taxes) on each...
Related to "Operating Margin"
 | Analyzing Operating Margins Analyzing a company's operating results is often the most important aspect of equity analysis. How well a company generates operating cash flow... | | 
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