Operating Profit Margin

The Operating Profit Margin (OPM) calculator computes the percentage earned on sales before adjusting for nonrecurring items, interest, and taxes.

INSTRUCTIONS:  Choose your preferred currency units and enter the following:

• (O) Operating earnings
• (S)  Net Sales

Operating Profit Margin %:  The calculator returns the percent of operating profit margin.

Operating Profit Margin

The Operating Profit Margin provides the business owner a lot of important information about the firm's profitability, particularly with regard to cost control. It shows how much cash is thrown off after most of the expenses are met. A high operating profit margin mean that the company has good cost control and/or that sales are increasing faster than costs, which is the optimal situation for the company. Operating profit will be a lot lower than the gross profit since selling, administrative, and other expenses are included along with cost of goods sold. As the company grows and sales revenue grows, overhead, or fixed costs, should become smaller and smaller percentage of total costs and the operating profit margin should increase. A high operating profit margin usually means that the business firm has a low-cost operating model.