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The FDIC studio before tax
FDIC’s Immortal Images example has 100,000 of photography sales, 10,000 of supplies and assistant pay, and 40,000 of studio overhead. Operating profit is 50,000. Income tax comes later.
Revenue: 25% lower
Change revenue to 75,000 while keeping the other example values the same.
Revenue: 25% higher
Change revenue to 125,000 while keeping the other example values the same.
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Quick answer
What does the Operating profit margin calculate?
What share of revenue remains after cost of goods sold and overhead? This calculator uses revenue, cost of goods sold, and overhead (operating expenses) to estimate operating profit as a share of revenue immediately in your browser.
With the values currently entered, the result is 50% — operating profit margin. It also shows operating profit, gross profit, and overhead share of revenue.
How to use the Operating profit margin
- Replace the example values with your own numbers.
- Review the result and supporting figures as they update automatically.
- Check the formula and assumptions before using the estimate for a decision.
Inputs used
- Revenue
- Cost of goods sold
- Overhead (operating expenses)
Operating profit margin formula
Operating profit = revenue − COGS − overhead. Operating profit margin = operating profit ÷ revenue.
Assumptions
- FDIC Money Smart writes operating profit as revenue minus cost of goods sold minus overhead. Income tax is left for the net profit page.
- This is a planning ratio for one period you choose. Owner draws, depreciation rules, and the tax bill stay out of these boxes.
Verify the inputs
Authoritative sources
These sources explain the definitions, factors, or rules behind this tool. Their geographic scope is shown because an official source for one country is not automatically valid somewhere else.
Writes the P&L as revenue − COGS = gross profit, then − overhead = operating profit, then − income tax = net profit. Profit margin is net profit ÷ revenue.
Beginners’ guide to financial statementsUS Securities and Exchange CommissionScope: General investor education; US sourceWalks an income statement from sales to cost of sales, then to gross profit, operating expenses, and the bottom-line net earnings.
Figuring gross profitUS Internal Revenue Service — Publication 334Scope: US Schedule C small-business tax guide; method is generalChapter 7 figures gross profit as net receipts minus cost of goods sold. It then tests accuracy as that profit divided by net receipts, compared with the markup policy.
Sources do not endorse Calculum. Check the source date, scope, and your own documents before making a financial, tax, insurance, or reporting decision.
Practical guide
Operating profit margin example and edge cases
Operating profit sits between gross profit and net profit. FDIC Money Smart writes it as revenue minus cost of goods sold minus overhead. The margin is that leftover divided by revenue.
Example: The FDIC studio before tax
FDIC’s Immortal Images example has 100,000 of photography sales, 10,000 of supplies and assistant pay, and 40,000 of studio overhead. Operating profit is 50,000. Income tax comes later.
- Revenue
- 100,000
- Cost of goods sold
- 10,000
- Overhead (operating expenses)
- 40,000
Calculated result50%operating profit margin
50,000 ÷ 100,000 is a 50 percent operating margin. Gross profit is 90,000. The net profit page then subtracts the 10,000 tax estimate and lands at 40 percent.
Example results use the default display profile. The calculator above follows your selected country and units.
How to read the result
- Read the percent, then the operating profit in money. A 50 percent margin on 20,000 of sales is a thinner cushion than 50 percent on 200,000.
- Overhead is the running cost FDIC calls operating expenses. Keep the tax bill out of this box.
Edge cases worth checking
You mixed income tax into overhead
Take it out. FDIC treats tax as the next line after operating profit. Mixing it here hides the operating result and double-counts it on the net page.
A one-off equipment purchase landed in overhead
FDIC spreads equipment through depreciation, not the full purchase. Put only this period’s operating cost in overhead, or the margin looks worse than the year really was.
What changes the result most
Revenue
Use a current amount for revenue. Include fees or recurring costs that belong in the same figure.
Cost of goods sold
Use a current amount for cost of goods sold. Include fees or recurring costs that belong in the same figure.
Overhead (operating expenses)
Use a current amount for overhead (operating expenses). Include fees or recurring costs that belong in the same figure.
Try a different scenario
Small changes show whether the answer is stable or sensitive.
Revenue: 25% lower
75,00033.3%operating profit margin
Revenue: 25% higher
125,00060%operating profit margin
Cost of goods sold: 25% higher
12,50047.5%operating profit margin
Common mistakes
Check revenue
FDIC Money Smart writes operating profit as revenue minus cost of goods sold minus overhead. Income tax is left for the net profit page. Make sure this matches the number you enter.
Keep overhead (operating expenses) consistent
This is a planning ratio for one period you choose. Owner draws, depreciation rules, and the tax bill stay out of these boxes. Use the same units and time period throughout the calculation.
Do not rely on one operating profit margin scenario
Run a cautious case and an optimistic case. The range is often more useful than one exact-looking number.
Use this result well
What share of revenue remains after cost of goods sold and overhead?
It does not replace a quote, contract, accountant, or local employment guidance.