Primary navigation:

QFINANCE Quick Links
QFINANCE Reference
Add the QFINANCE search widget to your website

Home > QFINANCE Dictionary > Definition of operating margin

Definition of

operating margin


profit calculated as sales minus cost of sales sales less cost of sales, expressed either as a value or as a percentage of sales value. The operating margin may be calculated at different stages, for example, either net or gross. The level of profit reported is also influenced by the extent of the application of accounting conventions, and by the method of product costing used, for example, marginal or absorption costing.

Related definitions of "operating margin"

Recommended Further Reading (Term count)
  • Understanding Equity Capital in Small and Medium-Sized Enterprises
    by Siri Terjesen
    Entrepreneurs may require both debt and equity financing, and often start their firms by financing growth through equity. Equity capital is money invested in the venture with no legal obligation on the entrepreneur to repay the principal amount or to pay interest on it; however, it requires sharing the ownership and profits with the funding source, and possibly also paying dividends to equity investors.After value has been built, entrepreneurs...
operating margin - Related Articles
  • Gross Profit Margin Ratio


    The gross profit margin ratio measures how efficiently a company uses its resources, materials, and labor in the production process by showing the percentage of net sales remaining after subtracting the cost of making and selling a product or service. It is usually expressed as a percentage

  • Managing Operational Risks Using an All-Hazards Approach

    Best Practice

    For the purpose of this discussion, Operational Risk Management (ORM) is considered to be the policies, methods, practices, and institutional culture that enable an enterprise to understand, prioritize, and control risks that threaten the well-being of the organization, its business partners
    By Mark Abkowitz

  • Return on Sales


    Although return on sales (ROS) is another tool used to analyze profitability, it is perhaps a better indication of efficiency. In some business environments, it is also called margin on sales percentage, or net margin.


Definitions of ’operating margin’ and meaning of ’operating margin’ are from the book publication, QFINANCE – The Ultimate Resource, © 2009 Bloomsbury Information Ltd. Find definitions for ’operating margin’ and other financial terms with our online QFINANCE Financial Dictionary.

Back to top

Related Blog Posts

More related Blog results