Definition
Operating margin is a profitability ratio that measures the percentage of revenue that remains after paying for variable costs of production, such as wages and raw materials.
Related Services
Financial reporting, profitability analysis, and cost control services help businesses calculate and optimize their operating margin.
Problem and Application
A low operating margin can indicate inefficiencies, high costs, or pricing issues, while a high margin indicates good cost control and profitability.
Conclusion
Operating margin is a critical indicator of operational efficiency and profitability, helping businesses assess their ability to generate income from core activities.
