Operating Margin Calculator
Calculate operating margin from revenue and operating income and see whether your business model turns a profit at scale.
Income statement
Operating margin
Enter revenue and operating income.
Operating margin separates good businesses from great ones
Operating margin is operating income divided by revenue. Two companies can have the same gross margin and very different operating margins. The difference is operating efficiency: how much of the gross margin survives sales, marketing, research and development, and overhead. Operating margin that keeps shrinking year after year usually points to a structural problem with the business model.
How to read the result
- 20% or more: excellent
- 10% to 20%: healthy
- 5% to 10%: average
- 0% to 5%: thin
- Below 0%: the business loses money on operations
These bands are a rough guide. Margins vary a lot by industry, so compare yourself with your own past results and with direct peers.
Frequently asked questions
Operating margin or EBITDA margin?
Operating margin includes depreciation and amortization. EBITDA margin does not. Both are useful, but EBITDA is easier to compare across capital-intensive industries.
Is operating margin the same as net margin?
No. Net margin also subtracts interest and taxes, so it is usually lower than operating margin.