# How do you calculate the operating profit margin?

To calculate the operating margin, divide operating income (earnings) by sales (revenues).

## What is the formula for calculating operating profit margin?

To calculate a company’s operating profit margin ratio, divide its operating income by its net sales revenue:

1. Operating Profit Margin = Operating Income / Sales Revenue.
2. Operating Income (EBIT) = Gross Income – (Operating Expenses + Depreciation & Amortization Expenses)

## What is operating profit margin example?

The operating profit margin calculation is the percentage of operating profit derived from total revenue. For example, a 15% operating profit margin is equal to \$0.15 operating profit for every \$1 of revenue.

## How do you calculate operating margin example?

Operating Margin Formula
For example, say a company reported on its 2020 annual income statement a total of \$100 million in net sales revenue. Total COGS and operating expenses for the year were \$60 million, resulting in operating income of \$40 million. Its operating margin is 40% (\$40 million/\$100 million x 100).

## What is the company’s operating profit margin?

Operating Margin = Operating Income / Revenue X 100.

## How do I calculate operating profit margin in Excel?

Operating Profit = Gross Profit – Variable Costs (Labour Expense + General & Admin Expenses)

1. Operating Profit = Gross Profit – Variable Costs (Labour Expense + General & Admin Expenses)
2. Operating Profit = \$35,000 – (\$12,000 + \$8000)
3. Operating Profit =\$35,000 – \$20,000.
4. Operating Profit = \$15,000.

## Why would a company calculate its operating margin?

An operating margin is an important measurement of how much profit a company makes after deducting for variable costs of production, such as raw materials or wages. A company needs a healthy operating margin in order to pay for its fixed costs, such as interest on debt or taxes.