How is operating margin different from net margin?

Operating margin excludes interest expense and taxes, isolating the profitability of core operations, while net margin accounts for everything, including financing costs and taxes.

What's a healthy operating margin?

It's highly industry-dependent — software companies often see 20-40%+, while grocery retailers commonly operate on thin single-digit margins.

Operating Margin Calculator

Operating margin measures how much profit a company makes from its core operations, as a percentage of revenue, after subtracting operating expenses like COGS, wages, and overhead — but before interest and taxes.

Inputs

Results

Operating Margin: 18.75%

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Formula

Operating Margin = (Operating Income / Revenue) × 100

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Profitability Metrics Beyond the Bottom Line

Gross profit, return on assets, operating margin, and the fixed-to-variable cost ratio — four different lenses on how efficiently a business turns revenue into profit.

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