In business, operating margin — also known as operating income margin, operating profit margin and return on sales (ROS) — is the ratio of operating income ("operating profit" in the UK) divided by net sales, usually presented in percent.
Net profit measures the profitability of ventures after accounting for all costs.
Return on sales (ROS) is net profit as a percentage of sales revenue. . . . ROS is an indicator of profitability and is often used to compare the profitability of companies and industries of differing sizes. Significantly, ROS does not account for the capital (investment) used to generate the profit. In a survey of nearly 200 senior marketing managers, 69 percent responded that they found the "return on sales" metric very useful.
Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) is a rough measure of operating cash flow, which reduces the effect of accounting, financing, and tax policies on reported profits.
Read more about Operating Margin: Purpose, Construction
Famous quotes containing the words operating and/or margin:
“Go on then in doing with your pen what in other times was done with the sword; shew that reformation is more practicable by operating on the mind than on the body of man.”
—Thomas Jefferson (1743–1826)
“Everything that explains the world has in fact explained a world that does not exist, a world in which men are at the center of the human enterprise and women are at the margin “helping” them. Such a world does not exist—never has.”
—Gerda Lerner (b. 1920)