Businesspricing

Operating Margin Calculator

Operating profit as a share of revenue. The margin of the business itself, before financing structure and tax.

Also called: ebit margin calculator, operating profit percentage.

Operating margin

18%

How this is calculated

Method and background

How this is calculated

EBIT over revenue. It strips out how the company is funded and where it is taxed, which is what makes it the right margin for comparing two businesses that made different financing choices.

operating_margin = ebit / revenue * 100

EBIT: Earnings before interest and tax (currency)

Worked examples

Each of these is asserted on every build. If a change to the engine ever moved one of these answers, the build would fail before the page could print it.

18% operating margin

Revenue: $100,000.00
Operating income (EBIT): $18,000.00

Operating margin18%

arithmetic identity

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operating loss

Revenue: $80,000.00
Operating income (EBIT): -$8,000.00

Operating margin-10%

boundary

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zero revenue

Revenue: $0.00
Operating income (EBIT): $100.00

Operating margin0%

degenerate case

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