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Operating margin

Operating income as a share of revenue: what's left from each dollar of sales after running the business, before interest and taxes.

Simple example

A company has $100 of revenue. It spends $30 making the product and $55 on research, sales and admin. That leaves $15 of operating profit, an operating margin of 15%.

Revenue $100Cost $30R&D, sales, admin $55$15Operating margin = operating profit ÷ revenue15 ÷ 100 = 15%What's left after running the business
Made-up numbers, for illustration only.

Related terms

Gross marginThe share of revenue left after the direct cost of the product.Operating leverageWhen costs are mostly fixed, profit moves faster than revenue.Net incomeThe profit left after all costs, interest and taxes.