Formula
to calculate operating margin:
Operating
Margin = (earnings before interest and taxes) /
sales.
Operating
margin definition and explanation:
The
operating margin is also referred to as operating profit
margin, or EBIT to sales ratio.
The
operating margin ratio determines whether the fixed costs are
too high for the production volume.
The operating margin ratio is included in the financial
statement ratio analysis spreadsheets highlighted in the
left column, which provide formulas, definitions,
calculation, charts and explanations of each ratio.
The operating margin is listed in our profitability
ratios.
Spreadsheets to
calculate ratios (includes formulas, definitions,
explanations and charts):
See list
of ratios , or the financial statement ratio
analysis spreadsheets which are not highlighted in the
left column, to see which other ratios our spreadsheets
calculate, define and explain.
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explanations for each ratio.
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