Operating margin is a measure of profitability that expresses the amount of net income earned by a business as a percentage of total sales. It’s calculated by dividing operating income—which is total revenues minus total operating expenses—by total sales for the same period. This metric is used to evaluate how effectively a company is using its resources to generate profit, and how viable it may be in the long term. By assessing operating margins over time, savvy investors can spot trends that signal overall efficiency and financial health. If you want to stay ahead of the competition, use operating margin calculation to maximize your profits.