Operating margin

In business, operating margin—also known as operating income margin, operating profit margin, EBIT margin and return on sales (ROS) - is the ratio of operating income ("operating profit" in the UK) to net sales, usually expressed in percent.

Operating margin

=

Operating income

Revenue

.

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

Net profit measures the profitability of ventures after accounting for all costs.

Return on sales (ROS) is net profit as a percentage of sales revenue. 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 capital (investment) 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 Earnings before interest, taxes, depreciation, and amortization (EBITDA) margin, operating margin takes into account depreciation and amortization expenses. {NNP = GNP- depreciation /GNP = GDP- depreciation}

Purpose

These financial metrics measure levels and rates of profitability. Probably the most common way to determine the successfulness of a company is to look at the net profits of the business.