Operating income margin

Operating income margin


Operating income margin is a ratio commonly used to evaluate company's operating performance. This ratio is one of the most popular profitability ratios which show operating efficiency. Data to calculate this ratio is collected from the income statement. Operating income margin shows to the managers how much a company makes from each dollar of sales ratio.

Norms and limitations

Every industry has its own norms for this ratio.

An increasing value of operating margin indicates better performance of the company. Once the value starts decreasing, it indicates possible financial problems.

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