Microsoft's operating margin

mentor: Gross marginDefinitionGross marginThe share of each revenue dollar left after the direct cost of producing what was sold. It is the first read on pricing power and production efficiency, and the starting point of every margin analysis.Gross margin = Gross profit ÷ Revenue = (Revenue − Cost of revenue) ÷ RevenueDrivers: Price · Cost · Volume · MixFull definition → measures what a company keeps after the direct cost of its product. Operating marginDefinitionOperating marginOperating income as a share of revenue — what remains after both the direct cost of sales and the operating expenses (R&D, sales & marketing, G&A) that run the business. It measures how much of the gross margin survives the cost of operating the company.Operating margin = Operating income ÷ RevenueDrivers: Gross margin · Opex leverage · One-time itemsFull definition → goes one line further down the income statement: it also subtracts the operating expenses — research, selling, and administration — that run the business.

Below are Microsoft's own figures from its latest annual reportDefinitionForm 10-KThe audited annual report a US public company files with the SEC — the most complete single document about a business: audited financial statements, management's discussion, risk factors, and the auditor's own opinion. It is the primary source nearly every figure on Echelon grounds to.One 10-K = audited statements + MD&A + risk factors + auditor's reportDrivers: Assurance · Cadence · Restated comparativesFull definition → (Form 10-K), pulled from SEC EDGAR. Use them to compute the operating marginDefinitionOperating marginOperating income as a share of revenue — what remains after both the direct cost of sales and the operating expenses (R&D, sales & marketing, G&A) that run the business. It measures how much of the gross margin survives the cost of operating the company.Operating margin = Operating income ÷ RevenueDrivers: Gross margin · Opex leverage · One-time itemsFull definition → yourself.

Operating marginDefinitionOperating marginOperating income as a share of revenue — what remains after both the direct cost of sales and the operating expenses (R&D, sales & marketing, G&A) that run the business. It measures how much of the gross margin survives the cost of operating the company.Operating margin = Operating income ÷ RevenueDrivers: Gross margin · Opex leverage · One-time itemsFull definition → = operating income ÷ revenue.