In business, operating margin — also known as operating income margin, operating profit margin and return on sales (ROS) — is the ratio of operating income ("operating profit" in the UK) divided by net sales, usually presented in percent.
Net profit measures the profitability of ventures after accounting for all costs.
Return on sales (ROS) is net profit as a percentage of sales revenue. . . . ROS is an indicator of profitability and is often used to compare the profitability of companies and industries of differing sizes. Significantly, ROS does not account for the capital (investment) used to generate the profit. In a survey of nearly 200 senior marketing managers, 69 percent responded that they found the "return on sales" metric very useful.
Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) is a rough measure of operating cash flow, which reduces the effect of accounting, financing, and tax policies on reported profits.
Read more about Operating Margin: Purpose, Construction
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