Operating Profit Margin (EBIT Margin)
Operating profit as a percentage of revenue, after deducting operating expenses but before interest and tax
What is Operating Profit Margin (EBIT Margin)?
Operating profit margin, also called EBIT margin, is the percentage of revenue left after operating costs, before interest and tax. It shows how profitable the core business is.
Because it excludes financing and tax, it is a good way to judge operational performance and compare businesses.
How this KPI is measured
- Function
- Finance
- Sub-function
- Financial Reporting
- Industry
- All Industries
- Type
- Lagging
- Impact
- Financial control
- Unit
- %
- Measurement frequency
- Monthly / Quarterly
- Formula
- (Operating profit / Revenue) × 100
How to calculate it
Divide operating profit by revenue, and multiply by 100.
For example, if operating profit is 2,400,000 on revenue of 20,000,000, the margin is 12%.
Unlike EBITDA margin, it includes depreciation and amortisation, so it reflects the cost of using assets.
Where it is used
Judging core profitability
See operations before financing.
Comparing units and companies
Benchmark operations.
Tracking efficiency
Follow the trend.
How to improve it
Tips and common mistakes
- Compare like industries.
- Watch one-off costs and gains.
- Read with cash flow.
More Finance kpi library
Build better plans, faster
Join the waitlist for early access to curated insights, flexible templates, and rapid iteration across strategy, planning, and project management.