Of the various factors in an operating margin, which one is the most difficult to change?

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03-08-2022
Business

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Of the various factors in an operating margin, which one is the most difficult to change?

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MubeenaD MubeenaD · Answer 1 · 2022-08-13T15:07:37+02:00

Of the various factors in an operating margin,fixed cost is one of the most difficult to change.

There are other sorts of profit margins (such as gross versus net), but this discussion concentrates on net profit margin because net earnings are more influenced by a variety of circumstances.

For example, if you are a retailer, your branding and marketing strategy will indirectly effect your profit margin through revenues. Nearly every facet of your business's operations, from management to floor sales strategies, has some bearing on your profit margin.

Simply dividing net profit (or net income—the bottom line in the income statement) by sales yields net profit margin, which is the ratio of net income to revenues (or revenue).

This is a quick approach to figure out what portion of the sale price your business keeps after deducting the costs associated with the transaction.

To learn more about Fixed Costs here

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