Operating profit margin
In one sentenceOperating profit divided by net sales, measuring what the core business earns from each riyal before interest and Zakat or tax.
Simply put
This margin sits between the gross and the net: it deducts the cost of goods and operating expenses such as salaries, rent and marketing, but it does not deduct the cost of financing or Zakat.
It helps you see whether the business itself is profitable, apart from the decision to borrow or non-recurring items.
Worked example
A food distribution business made net sales of 2,000,000 SAR, and its operating profit after operating expenses was 300,000 SAR.
Net sales2,000,000 SAR
Operating profit300,000 SAR
Margin = 300,000 ÷ 2,000,00015%
Formula: Operating profit ÷ net sales
Don't confuse it with
Net profit marginThe net margin also deducts interest and Zakat, so it is affected by how the business is financed.