Margin Definition:

Margin can be defined as net operating income divided by sales.

Margin = Net operating income / Sales

Sales include all cash as well as credit sales.

Example:

A company’s net operating income is $10,000. Total sales for the year were $30,000.

Required: Calculate margin.

Margin = Net operating income / Sales

$10,000 / $30,000

0.33

or

33%

Other Related Accounting Articles:

• Return on Investment (ROI) Definition
• Maintenance Margin
• Margin of Safety Definition
• Accounts Receivable Collection Period
• Contribution Margin (CM) Ratio Definition
• Residual Income
• Overcast
• Credit Utilization Rate
• Operating Leverage Definition
• Degree of Operating Leverage Definition