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Margin Definition:

Margin can be defined as net operating income divided by sales.

Margin = Net operating income / Sales

Sales include all cash as well as credit sales.

Example:

A company's net operating income is $10,000. Total sales for the year were $30,000.

Required: Calculate margin.

Margin = Net operating income / Sales

$10,000 / $30,000

0.33

or

33%

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