Message Font: Serif | Sans-Serif
 
No. of Recommendations: 0
Is there a difference btw the terms "Operating Margin" and "Gross Margin".

Recently I was looking at JNJ and the Value Line Suvey says that their operating margin for 2003 was 30.5%. However, when I calculate it myself (revenue = 41862, gross profit = 29686) I come up with 71%. This leads me to believe that the two terms are just inverse where operating margin is cost of revenue / sales, and gross margin is gross profit / sales. Please advise.
Print the post Back To Top
No. of Recommendations: 0
Hi choli100,

Is there a difference btw the terms "Operating Margin" and "Gross Margin".

Yes, there is a difference...

gross profit = sales - cost of sales
operating income = gross profit - operating expenses

gross margin = gross profit / sales
operating margin = operating income / sales

Hope this helps.

regards,
4
Print the post Back To Top