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Saturday, July 30, 2011

Operating Profit Margin Ratio Analysis

Operating Profit Margin (also known as EBIT to sales ratio, return on sales, or operating margin) is a type of profitability ratio used to measure the Operating Profit in relation to the Net Sales. A higher ratio is better because it indicates that the company can keep its costs under control (with lower fixed cost). It can also mean that sales are increasing faster than costs.

Formula:

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