Free Operating Margin Calculator
Calculate operating margin to measure what percentage of revenue remains after covering operating expenses but before interest and taxes.
Operating Margin
20.00%
Operating Margin vs Revenue
How to Calculate Operating Margin
Formula
Operating Margin = (Operating Income / Revenue) x 100
Operating margin isolates the profitability of core business operations by excluding interest, taxes, and non-operating income. It reveals how efficiently management controls operating costs. Improving operating margin year over year signals growing operational discipline and pricing power.
Example Calculation
A company has $1,000,000 in revenue and $200,000 in operating income.
- 01Operating Margin = ($200,000 / $1,000,000) x 100 = 20%
- 02Total Operating Expenses = $1,000,000 - $200,000 = $800,000
- 03Twenty cents of every revenue dollar is operating profit.
Frequently Asked Questions
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