Operating Margin Ratio Formula is a financial metric used to measure a company’s ability to generate profits from its operations before tax and interest expenses. The formula is calculated by taking the operating income (EBIT) divided by total net sales. This ratio enables investors and analysts to compare a company’s performance to others in the same industry. Additionally, this metric can be used to evaluate management’s effectiveness in controlling costs and maximizing profitability. By monitoring and analyzing operating margin ratios over time, investors can gain insights into how well the company is managed.