Definition
Operating margin is operating income divided by revenue. It reflects profitability after operating expenses.
Formula
Operating margin = operating income / revenue
Measured as
Operating margin = operating income / revenue
Operator takeaway
- Tie Operating Margin to the same balance-sheet date, scenario, and decision memo you are using elsewhere in the model.
- Document which claims, costs, or adjustments your team includes before comparing numbers across forecasts, covenants, or valuation work.
Next decision
- Decide whether Operating Margin belongs in cash planning, valuation, or debt monitoring so the number is used in the right model.
- If the number changes, trace the timing, policy, or balance-sheet assumption behind it before you react.