How To Calculate Operating Profit Margin
Running a business, whether big or small, requires you to keep track of your expenses, income, and profit. Such figures will tell you whether your business is doing well. Every successful business also uses such figures to make changes to operations, as well as for planning for expansion or some other major modification to the business.
The operating profit margin is actually the ratio of the operating income to sales. It is used to assess the company's profitability without taking into account interest and taxes yet. But, before you can calculate your business' operating profit margin, you must calculate the operating income (also known as operating profit) first. Thus, calculating the operating profit margin (or operating margin) requires two steps: determining the operating income, and then determining the operating margin. Read the rest of this article for the steps on how to calculate these two items.
