Which one of the following is correct formula for calculating operating margin?

Question

Quizplus · Accepted Answer

Operating margin is calculated by dividing the operating income by the net sales, which gives the percentage of profit a company earned from its revenue, before deducting interest and taxes. Therefore, the correct formula for calculating operating margin is Operating income/Net Sales.

Option A (Net Profit/Net Sales) represents net profit margin, which indicates the percentage of profit a company earned from its sales after all expenses, including interest and taxes, have been deducted.

Option B (Net income/Net Sales) is the same as the net profit margin.

Option D (Operating income/credit sales) is incorrect as it excludes cash sales and does not represent the total revenue earned by the company.

Which One of the Following Is Correct Formula for Calculating