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What is Operating Margin?

Operating margin is a ratio (expressed as a percentage) that indicates how much a company makes for each dollar of sales.

It can be calculated by dividing a company’s operating income by net sales, and generally a company that has a high and consistently improving operating margin is thought to be healthy.

Operating margin can be looked at in terms of the overall company, or in a more focused vacuum - such as analyzing the operating margin of a new clothing line or an experimental sales project.

Keywords: profit, margin, corporate finance, operating profit margin,