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Operating Margin is a measurement of what proportion of a company's revenue is left over, before taxes and other indirect costs are incurred, after paying for variable costs of production like wages, raw materials etc.
A good operating margin is required for a company to be able to pay for its fixed costs like interest on its debt. A higher operating margin means that the company has less financial risk.
Formula:
Operating Margin = (Operating Income / Revenue)
Operating income is the difference between operating revenues and operating expenses
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What is the formula for Net Operating Margin in Excel?
=(total revenue- total expenditures)/revenue. you get a percentage.
Is operating profit margin and profit margin the same?
No. Operating profit margin usually means profit in terms of strict cost and revenues of the firm itself. Actual profit margin includes other, non-firm specific costs, such as payment of debts (which is not part of operation but still a liability of the firm).
How do you calculate the average contribution margin?
Formula for calculating average Contribution margin Average contribution margin = total contribution margin / total number of units
How do you calculate the breakeven point?
Formula for Breakeven point: Breakeven point = Fixed Cost / Contribution margin ratio Contribution margin ratio = Sales / contribution margin Contribution margin = sales - variable cost
What is the formula for net operating expenses in corporations?
Formula for calculating Gross operating expenses and net expenses in Corporations?
