Operating Margin

A percentage of a companys revenue that is left over after deducting its operating expenses

Operating Margin is a financial metric that represents the profitability of a small business by measuring the percentage of revenue remaining after deducting operating expenses. It is calculated by dividing the operating income by the total revenue and multiplying the result by 100. A higher operating margin indicates better cost management and efficiency in generating profits from core business operations. Small business owners can use the operating margin to assess the financial performance of their company, compare it with industry benchmarks, and identify areas for improvement in order to enhance profitability.