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Operating Profit
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| Operating Profit Margin =
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Net Sales
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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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