Meaning & use
operating profit margins
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Meanings
nouncountablebusinessfinance
The percentage of a company's revenue left as operating profit after running costs are paid.
Grammar: Countable, but often used in the plural; a single figure is 'an operating profit margin'.
Patterns
- operating profit margins of X percent
- improve operating profit margins
- operating profit margins fall/rise
The retailer's operating profit margins fell from 8% to 5% last year.
Analysts expect operating profit margins to improve as shipping costs drop.
Companies with high operating profit margins can invest more in research.
nouncountablebusinessfinance
A measure of how efficiently a business turns sales into profit from its main activities.
Grammar: Used as a countable noun phrase; the singular is 'operating profit margin'.
Patterns
- compare operating profit margins
- a healthy operating profit margin
Comparing operating profit margins helps investors see which firms are managed best.
A healthy operating profit margin gives a company room to handle a downturn.
Word forms
| singular | operating profit margin |
|---|
Common combinations
- improve operating profit margins
- Cutting waste helped them improve operating profit margins.
- operating profit margins fall
- Operating profit margins fall when costs rise faster than prices.
- high operating profit margins
- Software firms often enjoy high operating profit margins.
- operating profit margins of 10%
- The group reported operating profit margins of 10%.
Synonyms and how they differ
- operating margin
- A shorter everyday term for the same figure; it is common in headlines and less formal reports.
- profit margin
- Broader and can mean net or gross margin, so it is less precise than operating profit margin.
Word family
- operating profit noun
- The actual money a company makes from its main business before interest and tax.
- margin noun
- The difference between cost and selling price, often shown as a percentage.
Commonly confused: operating profit margins or net profit margin? operating profit margins or gross profit margin?
operating profit margins vs net profit margin
Net profit margin uses profit after all expenses, including interest and tax; operating profit margin stops before those items.
operating profit margins vs gross profit margin
Gross profit margin only subtracts the cost of goods sold, while operating profit margin also subtracts running costs like salaries and rent.
Practice
A company's sales are $1 million and its operating profit is $100,000. What is its operating profit margin?
Choose one answer.
Operating profit margin is operating profit divided by revenue, so $100,000 ÷ $1,000,000 = 10%. Choosing 1% confuses the ratio with the profit figure itself.
Make it your own
Write a sentence using “operating profit margins”, then check it and compare it with the examples above.