Operating Profit Margin
Operating Profit 
Operating Profit Margin =
Net Sales 

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.

 

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