Operating margin

In <a href="/facts/Business/For1e8Nh">business</a>, operating margin—also known as operating income margin, operating profit margin, EBIT margin and return on sales (ROS)—is the ratio of <a href="/facts/Operating_income/jvs9xNWQ">operating income</a> ("operating profit" in the <a href="/facts/United_Kingdom/kuPAILt2">UK</a>) to <a href="/facts/Revenue/UDcW3HGL">net sales</a>, usually expressed in percent.

Operating margin
        
        =
        
          
            Operating income
            Revenue
          
        
        .
      
    
    {\displaystyle {\text{Operating margin}}={\frac {\text{Operating income}}{\text{Revenue}}}.}

<a href="/facts/Net_profit/VLDTrkGC">Net profit</a> measures the <a href="/facts/Profit_(accounting)/8W9Kw0fx">profitability</a> of ventures after accounting for all costs.
Return on sales (ROS) is net profit as a percentage of sales <a href="/facts/Revenue/UDcW3HGL">revenue</a>. ROS is an indicator of profitability and is often used to compare the profitability of companies and industries of differing sizes. Significantly, ROS does not account for the <a href="/facts/Capital_(economics)/lLkzDdoB">capital</a> (<a href="/facts/Investment/VrMookcv">investment</a>) used to generate the profit. In a survey of nearly 200 senior marketing managers, 69 percent responded that they found the "return on sales" metric very useful.
Unlike <a href="/facts/EBITDA/A9Nb5E3f">Earnings before interest, taxes, depreciation, and amortization (EBITDA)</a> margin, operating margin takes into account depreciation and amortization expenses. {NNP = GNP- depreciation /GNP = GDP- depreciation

Operating margin open-in-new

Operating margin