Operating Margin

Operating margin is a measure of profitability that tells how much of revenue will eventually become profit for a company. The formula for calculating operating margin is Operating Income divided by Revenue. As such, Operating Margin is a measurement of what proportion of a company’s Revenue is left over, before taxes and other indirect costs. It typically excludes interest expense, nonrecurring items (such as accounting adjustments, legal judgments, or one-time transactions), and other income statement items not directly related to a company’s core business operations. Also sometimes referred to as Return on Sales.

Source: Staffing Industry Analysts

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