What is operating margin?

Operating margin is an important measure of a company's overall profitability from operations. It is the ratio of operating profits to revenues for a company or business segment.

What is the difference between operating income and EBITDA margin?

Operating income is an accounting figure that measures the amount of profit realized from a business's operations, after deducting operating expenses such as wages, depreciation, and cost of goods sold (COGS). EBITDA margin measures a company's profit as a percentage of revenue.

How do you calculate electronics company XYZ's operating margin?

Using this information and the formula above, we can calculate Electronics Company XYZ's operating margin by dividing $4,000 (operating earnings) by its $30,000 (revenue). This means that for every $1 in sales, Electronics Company XYZ makes $0.13 in operating earnings. What Is a Good Operating Margin?

Are higher margins better than lower margins?

Higher margins are considered better than lower margins, and can be compared between similar competitors but not across different industries. To calculate the operating margin, divide operating income (earnings) by sales (revenues).