Quick Definition
Measures the efficiency of the regular company operations.
Operating Profit Margin Formula
Explanation of Operating Profit Margin
The Operating Profit Margin measures the
Operating Profit in relation to the
Net Sales. This reveals the operating efficiency of the company - how well the company can convert its sales into profits from its day-to-day activities by its core operations.
Importance of Operating Profit Margin
The higher the Operating Profit Margin, the more efficient the company's core business. This ratio is interesting to compute between two or more competing companies in the same industry - to view which has the most efficient operations.
