Operating Profit Margin Excel Template

Description
Operating Profit Margin is used to see how much a company makes in terms of their operating profit. It is a profitability ratio that investors use a lot when deciding what corporations they should invest in.

There are two components to this formula. The first one is operating profit. This is found by deducting cost of goods sold and operating expenses from revenue. The importance of operating income is that it does not include income, earnings and expenses that aren't related to their operations. The second component that goes into the formula is net sales. Net sales is found by deducting any sales returns and discounts from goss sales. The formula is a ratio of comparing the operating profit to the net sales.

The net operating profit is very important to firms and investors. Net profit is the result of the whole income and expenses of a company. But, the operating profit shows how much the company has made from its actual operations. This is why it is a significant ratio when investing. But, an investor should also look at gross profit margin and net profit margin. By looking at all of these, the investor will be able to understand well how the company is actually doing.