How this calculator works
Calculate the portion of each sales dollar left as operating profit. Use revenue after sales returns and discounts, and profit before interest and income tax. Solve for the operating margin, sales or operating profit using a consistent accounting period.
Formula
ROS = operating profit / net sales. Operating profit = ROS × sales. Sales = operating profit / ROS.
Worked example
$75,000 operating profit from $500,000 sales gives 15%. A $10,000 operating loss on $250,000 sales gives -4%.
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Frequently asked questions
Is this a net profit margin?
It is an operating margin. Net margin uses income after financing costs and tax.
Can ROS be negative?
Yes. An operating loss yields a negative margin even with positive revenue.
Can I compare different industries?
Use care. Capital needs, revenue recognition and cost structures vary widely by industry.