Operating margin

Also called: ebit margin

The share of each sale left after all running costs (staff, marketing, research), before interest and tax.

Formula

Operating margin = Operating income (EBIT) ÷ Revenue

Worked example

1. Operating income (EBIT) = $2.0bn
2. Revenue = $10.0bn
3. $2.0bn ÷ $10.0bn

Result: 20.0%

How to read it

Shows how efficiently the core business runs. Rising operating margins over time are a good sign.

Worked example uses made-up figures for 'Example plc'

See it with real numbers: Any company page → (free account)