Financial Glossary
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Operating Margin
- A ratio used to measure a company's pricing strategy and operating efficiency.
Calculated as:
Operating margin is a measurement of what proportion of a company's revenue is left over after paying for variable costs of production such as wages, raw materials, etc. A healthy operating margin is required for a company to be able to pay for its fixed costs, such as interest on debt.
Also known as "operating profit margin" or "net profit margin".
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