Chapter 10
Operating profit margin
- Why: To better understand your financial performance, especially its operating efficiency and pricing strategy
- What: To measure the proportion of revenue that is left after removing all costs of operating the business
- When: When investors and managers want to understand and compare how profitable a business is, purely based on regular sales activities
- The question this indicator helps you to answer: to what extent are we operating our business efficiently?
Why does this KPI matter?
Another profitability measure used in companies is the operating profit margin (or operating margin for short). It can provide insights into a company’s operating efficiency and pricing strategy. By dividing the operating income ...
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