Financial StatementsBeginner

Operating Margin

Operating profit as a percentage of revenue.

Detailed explanation

It shows how much of each rupee of sales is left after all running costs, before interest and tax.

Formula

Operating margin = EBIT ÷ Revenue × 100

Example

EBIT ₹80 cr on revenue ₹500 cr → 16%.

Why it matters

A clean measure of operating efficiency across companies.

Key points

  • Higher is better within one industry.
  • Sensitive to fixed costs.
  • Compare with peers, not across sectors.

Related terms

EBITGross MarginNet Profit Margin

More in Financial Statements

Income StatementRevenueCost of Goods SoldGross MarginEBITDAEBIT

Educational content only. Definitions and examples are illustrative and are not investment, tax or legal advice.