Calculating Operating Margin is like a financial analysis tool that businesses use to assess their current financial standing. This important calculation helps business owners keep track of their organizational performance and understand how much profit each separate “operating” unit is making by comparing the total revenues generated against the total operating expenses incurred. Operating Margin allows business owners to compare their current performance with previous or projected performance and make adjustments – such as reducing costs – to increase profitability. In short, calculating Operating Margin can help businesses maximize their overall profits by helping them identify areas where they can reduce expenses or increase revenue.