Operating Margin Explained. Ratio That Tells Your Business Apart

Every business has its own core activities which are referred to as the Operating Activities.

Operating Income or Operating Profit refers to the profit that a business has after paying for all its Operating Expenses that include raw material costs, employee costs and all other operating bills. It is the amount available to cover the Interest & Tax obligations of the business. The Operating Profit when divided by the Revenue from Operating Activities gives us Operating Margin or Operating Profit Margin. It is a type of Profitability Ratio which implies how much a company earns as profit for every rupee of its sales.

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