Operating margin is the percentage of revenue left after paying all operating costs, including production costs, salaries, and rent. It shows how much profit remains from core business operations before interest and taxes are deducted.
A company has $100 million in revenue, $60 million in production costs, and $25 million in operating expenses. Its operating income is $15 million, giving it a 15 percent operating margin. This tells you that 15 cents of every sales dollar is profit from core operations.
Greater Fool is a free Chrome extension that explains terms like this in place. Highlight a word on any page, click Explain, keep reading.
Add to Chrome (free)