Fortune real estate Key Takeaways * What is operating margin? * How to calculate operating income to identify operating margin * Importance of understanding operating margins * How to improve a property’s operating profit margins --- If you’re investing in a business, there are few factors more important than the operating margin. It’s a huge part of deciding whether a company is running efficiently and whether it’s worth investing in them. In terms of real estate, operating margin is important because it tells you how much you can expect to earn from a property each month. But what is operating margin, exactly? In this guide, we’ll explore what it is, the difference between gross margin vs. operating margin, and the basic operating margin formula used to calculate it. What Is Operating Margin? An operating margin, sometimes called an operating profit margin, or return on sales (ROS), measures how efficiently a business is in turning sales into profits.
