What financial ratio is operating income divided by revenue?

The financial ratio of operating income divided by revenue is the operating margin.

Usually expressed as a percentage, operating margin shows how much of each revenue dollar remains after the costs of running the business, before interest and income taxes. Operating income generally reflects revenue minus operating costs, including cost of goods sold and operating expenses. For example, $200,000 of operating income on $1 million of revenue produces a 20% operating margin.

The measure is also called operating profit margin, operating income margin, EBIT margin, or return on sales in some contexts. It helps compare operating performance across periods or between companies, although industry differences in pricing, labor, depreciation, and business models can make direct comparisons misleading.

A common mix-up is EBITDA margin. Operating margin includes depreciation and amortization, while EBITDA adds those non-cash expenses back. Gross margin stops after subtracting the cost of goods sold, and net margin goes further by including items such as interest and taxes. A rising operating margin can signal better cost control or pricing power, but it does not by itself measure cash generation or shareholder returns.