Operating Profit Margin Calculator
This Operating Profit Margin Calculator will help you determine the operating profit margin, given the operating profit and total revenue. The Operating Profit Margin can be easily calculated by dividing the Operating Profit, located in the income statement, by the total revenue. This margin is also known as EBIT (Earnings Before Interest and Tax) Margin.
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How to Calculate Operating Profit Margin?
Operating profit is calculated by subtracting all COGSCost of Goods Sold (COGS)Cost of Goods Sold (COGS) measures the “direct cost” incurred in the production of any goods or services. It includes material cost, direct labor cost, and direct factory overheads, and is directly proportional to revenue. As revenue increases, more resources are required to produce the goods or service. COGS is often, depreciation and amortization and all relevant operating expenses from total revenues. Operating expenses include a company’s expenses beyond direct production costs – such things as salaries and benefits, rent and related overhead expenses, research and development costs, etc. The operating profit margin calculation is a percentage of operating profit derived from total revenue.
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