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    Question

    Which of the following formulae correctly calculates the

    Operating Profit Margin?
    A EBIT/ Sales Correct Answer Incorrect Answer
    B PAT/ Sales Correct Answer Incorrect Answer
    C PBT/ Sales Correct Answer Incorrect Answer
    D Gross Profit/ Sales Correct Answer Incorrect Answer

    Solution

    Operating profit is given by EBIT or Earnings before Interest and Taxes.  Operating profit margin is a profitability ratio that tells how much profit per unit of sales, a company earns from its operations, before accounting for interest cost and taxes. Operating profit margin = EBIT/Sales

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