What is Operating Profit Margin?
Operating Profit Margin is a measure of a company's operating efficiency, calculated as Operating Profit divided by Revenue. It shows how much of each dollar of revenue is left over after paying for the company's operating costs. A higher Operating Profit Margin indicates that a company is more profitable relative to its revenue.
Operating Profit Margin Formula Operating Profit Margin Examples Operating Profit Margin vs. Net Profit Margin?
Operating profit margin (OPM) is a measure of a company's operating efficiency. It is calculated by dividing operating income by net sales. OPM is used to assess a company's ability to generate profits from its operations.
An OPM of greater than 10% is considered good, while an OPM of less than 5% is considered poor.
Operating profit margin is also known as "operating income margin" or "operating profit ratio".
Some examples of how to calculate operating profit margin are:
Company A has net sales of $100,000 and operating income of $10,000. The operating profit margin is 10% ($10,000/$100,000).
Company B has net sales of $1,000,000 and operating income of $100,000. The operating profit margin is 10% ($100,000/$1,000,000).
Company C has net sales of $10,000,000 and operating income of $1,000,000. The operating profit margin is 10% ($1,000,000/$10,000,000).
Company D has net sales of $100,000,000 and operating income of $10,000,000. The operating profit margin is 10% ($10,000,000/$100,000,000).
Company E has net sales of $1,000,000,000 and operating income of $100,000,000. The operating profit margin is 10% ($100,000,000/$1,000,000,000).
Operating profit margin is different from net profit margin. Net profit margin is calculated by dividing net income by net sales. Net profit margin measures a company's overall profitability.
A net profit margin of greater than 10% is considered good, while a net profit margin of less than 5% is considered poor.
Some examples of how to calculate net profit margin are:
Company A has net sales of $100,000 and net income of $10,000. The net profit margin is 10% ($10,000/$100,000).
Company B has net sales of $1,000,000 and net income of $100,000. The net profit margin is 10% ($100,000/$1,000,000).
Company C has net sales of $10,000,000 and net income of $1,000,000. The net profit margin is 10% ($1,000,000/$10,000,000).
Company D has net sales of $100,000,000 and net income of $10,000,000. The net profit margin is 10% ($10,000,000/$100,000,000).
Company E has net sales of $1,000,000,000 and net income of $
