What does the term 'operating margin' refer to?

The term 'operating margin' specifically refers to the percentage of revenue that remains after covering operating expenses, excluding costs associated with interest and taxes. It measures how much profit a company makes on its core business operations for every dollar of revenue generated. Therefore, it reflects the efficiency of managing the operating costs associated with running a business.

In this context, identifying 'percent of revenue remaining after variable costs' aligns with the definition of operating margin, as it highlights the amount of revenue left for operating income once variable costs are deducted. This concept is crucial for analyzing a company's operational health and profitability, making it essential for financial assessments and business strategy.

The other options do not accurately capture the essence of operating margin:

• The percentage of total revenue spent on marketing pertains to marketing expenditures, which is not a measure of profitability.
• Net profit divided by total assets describes the return on assets, a different financial ratio that assesses how efficiently a company uses its assets to generate profit.
• The difference between gross revenue and total liabilities speaks to net worth or equity, rather than operational performance.

Thus, option B is the correct choice as it precisely defines operating margin in a financial context.