Operating Profit Margin
Business: Cambridge International GCSE (2027 Exams), topic 5.5.6
Operating profit margin
Operating profit is the profit after all operating costs are accounted for.
Operating profit
- Operating profit = Gross profit − Other operating expenses
Operating profit margin
- Operating profit margin (%) = (Operating profit ÷ Revenue) × 100
Purpose of operating profit margin
- This is a good measure of how well a company is being managed. If the operating profit margin is volatile, it indicates that the business is at risk.
Test yourself on Operating Profit Margin
What is the formula for operating profit?
A company which produces coffee has a revenue of £600,000 and a gross profit of £200,000. Operating expenses equal £95,000. What is the operating profit?
Bobby sells lemonade every Saturday. His revenue is £40 a week. His gross profit is £10. His operating expenses are £2. What is his operating profit margin?