Operating Profit Margin Ratio

Operating Profit Margin Ratio Calculation







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Operating profit margin ratio formula & calculator may used to find the ratio of operating income or earnings before interest and taxes (EBIT) to total revenue of a company. It's one of the important finance or accounting tool for performance analysis to determine how efficiently the company is cost wise handling its operations. The history of operating profit margin ratio helps the company to adjust its cost wise operations to convert its revenue into more profitable business. A higher operating profit margin ratio generally indicates that the company is efficiently using its every part of assets to make it more profitable business and provides more dividend on each shares or increased value of share, and a lower ratio indicates that the company is spending more cost on its operations and provides less dividends on each shares of a company. It is also known as Return on Sales (ROS) ratio.

Formula
Operating Profit Margin Ratio = Operating Income (or) EBIT/Total Revenue