Because there are additional expenses of operating a business beyond the direct costs of goods sold (COGS), another important profitability ratio is the operating margin, the ratio of operating income to revenue:EBIT margin is a similar financial metric can be used interchangeably. In some cases, EBIT might include non-operating income. These metrics are used by analysts and investors to compare the operational efficiency of different companies within an industry or to evaluate changes in a company's internal efficiency over time.
Learn Operating Margin with interactive examples and practice exercises in our Performance Metrics module.
This interactive learning module helps you understand Operating Margin through hands-on practice and real-world examples.