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Chapter 18
4.3 Operating profit margin
The operating margin is an expansion of the gross margin. It includes all of the items
that come after gross profit but before finance charges and taxation, such as
distribution and administration costs in the statement of profit or loss.
The operating profit margin is calculated as follows:
Operating profit
× 100%
Sales revenue
Tutor notes guidance – discussion points
Discuss with students possible explanations for changes in the operating profit
margin.
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