Operating margin is operating income as a percentage of revenue. It shows how much of each dollar of sales is left after the costs of running the business, before interest and tax.
Formula
operating margin = operating income / revenue
Both figures are for the same period, as reported. A trailing twelve-month margin divides TTM operating income by TTM revenue. A negative operating margin means an operating loss.
Reading it
Operating margin reflects both gross margin and how much the company spends on research, sales and administration. A company can grow its gross margin and still see its operating margin fall if spending grows faster. Large one-off charges distort a single period, so look at several.
When it says "not reported"
- Operating income is not reported for the period.
- Revenue is not reported, or is zero.
In the forecast leagues, operating margin replaces gross margin for companies that report no gross profit.