Definition of Operating Margin Ratio

Definition: What is Operating Margin Ratio?

Operating Margin Ratio also is known as Operating profit margin. It is the profitability ratio which shows the profit percentage made by the operating income.

Definition of Operating Margin Ratio

In other words, this ratio shows the leftover revenues after the payment of all the variable and operating costs. Leftover revenues use to cover the non-operating costs like interest expenses.

For investors and creditors, this is a very useful ratio because by using this ratio they find the profitability of the operations of the company.

If the operations give enough revenue then the income of the company depends upon operations of the company but if operations do not give enough revenue then the company need other ways to generate the income.

Financial Ratio is a forum where you will learn about all ratios definitions and formulas.

 

Updated: September 25, 2019 — 6:59 pm

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