# Operating Margin Calculator

Operating Margin Calculator is a tool that computes the profit a firm makes after paying for variable costs of production but before paying interest or tax

Operating Margin:
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Background Information

What does Operating Margin mean?
Operating margin is the measure of profitability and indicates how much of each dollar of revenues is left. Over after both costs of goods sold and operating, expenses are considered.
Formula
Operating Margin = Operating Earnings / Revenue
Example

Income Statement for Company XYZ, Inc.

 Revenue $1,000,000 Costs of Goods Sold$500,000 Labor $300,000 General & Admin. Expenses$50,000 Operating Earnings $150,000 According to the formula, Operating Margin is:- • =$150,000 / $1,000,000 • = 0.15 or 15% This means that for every$1 in sales, the Company XYZ makes \$0.15 in operating earnings.