Operating Margin Calculator

Calculate the operating margin

Operating margin measures what percentage of revenue is left as profit after covering the costs of running the core business, including cost of goods sold and operating expenses, but before interest and taxes. It is calculated by dividing operating income by revenue. An operating margin of fifteen percent means the company keeps fifteen cents of operating profit from every dollar of sales. Because it focuses on operations and excludes financing and tax effects, it isolates how efficiently the underlying business converts sales into profit.

Operating income is also known as earnings before interest and taxes, or EBIT.

What operating margin reveals

Operating margin is one of the clearest measures of a company's operational health and pricing power. A rising margin indicates the business is controlling costs or commanding better prices, while a falling margin can signal cost pressure or competition. Comparing operating margins across companies in the same industry shows which ones run most efficiently.

It sits between gross margin, which reflects only production costs, and net margin, which includes interest and taxes, giving a balanced view of core profitability. Margins vary widely by industry, so always compare like with like. All calculation happens locally in your browser.

Related tools

• Compound Interest Calculator — Project how savings or investments grow with compound interest and regular contributions, in both nominal and inflation-adjusted terms.
• Mortgage Calculator — Calculate mortgage payments from price, deposit, rate and term, with total interest, amortisation and the costs beyond principal and interest.
• EMI Calculator — Calculate equated monthly instalments for a loan, with total interest, amortisation breakdown and the effect of prepayment.
• Paycheck / Salary Calculator — Work out net pay per paycheck after tax and deductions, including the extra-paycheck months.