How is the operating margin defined?

The operating margin is defined as the total profit as a percent of total revenue. This financial metric gauges the efficiency of a company in managing its operating expenses. It indicates how much profit a company makes from its operations, expressed as a percentage of total revenue. By calculating the operating margin, stakeholders can assess the overall health of the business, as it reflects the company’s ability to convert revenue into profits after covering operating costs.

This measure is particularly useful in evaluating the operational performance over time, allowing comparisons between periods and aiding in benchmarking against industry peers. It emphasizes the core business performance, excluding non-operational aspects such as taxes and interest, thus providing clearer insights into how well the operations contribute to profitability.

In contrast, the other options focus on different aspects of a business's financial or operational metrics that do not directly correlate to the definition of operating margin: total costs, daily occupancy rates, and occupancy percentages do not convey profitability as a direct ratio of revenue.