Definition

Paying extra money on loans and borrowed funds. Keeping these costs low makes the overall debt easier to handle.

What to consider

  • Focus on reducing operating expenses.
  • Benchmark against industry standards.
  • Review margins regularly for improvements.

Real world scenarios

  • A restaurant in Portland calculates operating margin after subtracting daily operating costs from total revenue.
  • A retail store monitors its margin to ensure profitability on each sale.
  • A service business reviews operating margin to evaluate core performance.

Related terms

Entrepreneurial Finances