It is calculated as Operating Income divided by Revenue multiplied by 100.
Operating income / Revenue * 100%
It shows the share of income that is available to cover non-operating expenses, such as interest payments, which is why investors pay close attention to this indicator. Overly volatile operating margins are a key indicator of operational risk and predictability. In addition, analyzing a company's past operating margin is a good way to assess whether a significant increase in revenue can continue.