What formula is used to calculate the operating profit margin?

The formula for calculating the operating profit margin is operating profit divided by revenue, multiplied by 100 to express it as a percentage. This margin provides insight into how efficiently a company is generating profit from its core business operations, excluding any income derived from non-operational sources such as investments or sales of assets.

Operating profit is calculated by taking the revenue and subtracting the cost of goods sold and operating expenses. By using the formula, businesses can assess their profitability relative to total revenue, which helps identify how well they manage their core activities and control their operational costs. This is particularly useful for management and stakeholders in evaluating the company's performance and operational efficiency over time.