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How to calculate Operating margin

The Operating margin formula, with plain worked examples you can check yourself.

Operating margin = (R − COGS − Opex) ÷ R × 100

The result is a percentage (%).

Worked examples

R = 900 · COGS = 360 · Opex = 90Operating margin = 50%
R = 200 · COGS = 100 · Opex = 50Operating margin = 25%
R = 400 · COGS = 200 · Opex = 40Operating margin = 40%

How to use it

  1. Write down the values for each letter in the formula.
  2. Do the brackets first, then divide or multiply.
  3. Multiply by 100 to show the answer as a percentage.
  4. Compare the answer with last period or with a competitor to see if it is good or bad.

This formula belongs to Profit & Margins.

Related terms

RevenueGross marginNet incomeEBITDAOperating profit

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