Operating margin
Operating margin measures the proportion of a company's revenue that remains after paying for their costs, such as wages and raw materials. It’s shown as a percentage and indicates how efficiently a company is managing their operations. The formula is:
- Operating income: This is the profit earned from a company's core business operations, excluding deductions for interest and taxes
- Revenue: This is the total income generated from sales of goods or services
A higher operating margin suggests that a company is more efficient at controlling their costs and generating a profit. A lower margin indicates they may be struggling with high operating expenses relative to revenue.
We acknowledge and thank the FMA, Dr Karena Kelly and Brook Taurua Grant, the RBNZ and the Māori Dictionary for their research which helped us with te Reo Māori kupu for this glossary.
Ready to Hatch your tomorrow?
Join the Kiwis who are hatching their tomorrow and have invested more than $1 billion with Hatch.
