Operating Profit Margin

Operating profit margin is the profit as a percentage of sales after overhead (operational expenses) costs. It effectively calculates the profit as a function of the company’s primary purpose and not all sources of revenues and auxiliary costs.

Operating Profit Margin – Formula and Understanding

Operating Profit Margin - Formula and Understanding

Operating profit margin refers to the value earned as a percentage of net sales. The operating profit is often referred to as earnings before interest, taxes, depreciation and amortization, (EBITDA). This is a misleading reference as operating profit is actually defined differently by industry sector. EBITDA is used primarily in valuing businesses.

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