Operating Profit Margin

Profitability

Updated Apr 2026 • Has calculator

The percentage of revenue remaining after all operating costs — before interest and taxes.

What is Operating Margin?

Operating margin (also called operating profit margin) divides operating income (EBIT) by total revenue, expressing as a percentage how much of each revenue dollar survives after paying for cost of goods sold, selling, general and administrative expenses, and depreciation — but before interest and taxes. It isolates operational efficiency independently of capital structure and tax policy, making it useful for comparing companies and tracking improvement over time. High-margin businesses often have strong pricing power or scalable cost structures.

Formula

Operating Margin = (Operating Income ÷ Revenue) × 100

Worked Example

FY2024

Step 1 Operating income (EBIT) FY2024: $123,216M

Step 2 Total revenue FY2024: $391,035M

Step 3 Operating Margin = $123,216M ÷ $391,035M × 100 = 31.51%

Step 4 → Apple keeps $0.32 in operating profit from every $1.00 of sales

Source: Apple 10-K FY2024 (2024-11-01)

Calculate Operating Margin

Operating Income (EBIT)

Revenue minus operating expenses (before interest and taxes), in millions of USD

Revenue

Total annual revenue in millions of USD

Operating Margin

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Not investment advice.

How to Interpret Operating Margin

< 5

Low — thin operating margins, competitive or commodity sector

5 – 15

Average — typical for most industries

15 – 30

Strong — pricing power or scalable cost structure

> 30

Exceptional — dominant franchise or software economics

📚 Profitability Metrics — Complete the path

Sources