Examples of Operating Costs

Example 1:

Andina's operating margins are higher and more stable than those of Coca-Cola's other major bottlers in Latin America. For the 12 months ended in September 1997, Andina's operating margin was 15.6%, compared with an average of 12.5% for the others. (
Year 1998-SIC 2085)

Explanation: Operating margins are what is left over after operating costs (these are primarily the costs of people and purchases) are subtracted from revenues. Andina's Operating Costs are 84.4% of sales.

Example 2:

Super Valu's retail food segment reported a 43% increase in operating income to $31.7 million. The margin improved 64 basis points to 2.6%. (
Year 1997-SIC 5411)

Explanation: The operating margin is the percentage of sales left over once Operating Costs are removed. SuperValu had Operating Costs of 97.4% of its sales.

Example 3:

U.S. Office Products' gross margin widened to 28.4% from 26.08% and operating margin improved to 5.3% from 4.0%. (
Year 1997-SIC 5961)

Explanation: The Operating Margin is the percentage of sales left over after Operating Costs are subtracted from sales. U.S. Office Products had Operating Costs of 94.7% of its sales.