Question

Please calculate operating margin % and excess margin % using the information below and explain how you arrived at your answer:

	2019
Revenue
Client Services−Gross	2,366,410
Contractual Allowances	72,565
Patient Revenue−Net	2,293,845
Other Revenue−Imaging	246,454
Total Revenue	2,540,299
Expenses
Salaries and Wages	1,292,372
Staff Benefits	339,904
Administrative Expenses	18,330
Advertising	34,000
Collection Fees	1,267
Computer Support	42,668
Consultants	1,529
Equipment Leases	10,400
Insurance	28,100
Laboratory	64,882
Laundry and Housekeeping	12,830
Legal/Audit	8,100
Medical Supplies	61,450
Office Supplies	18,437
Printing and Postage	4,222
Professional Fees	23,955
Rent	78,500
Repairs and Maintenance	3,167
Telephone	2,766
Utilities	18,925
Interest	350
Depreciation	22,556
Bad Debt Expenses	2,437
Total Expenses	2,091,147
Income (Loss) Before Taxes	449,152
Federal Tax	175,169
State Tax	40,424
Income (Loss) After Taxes	233,559

Answer 1

I could not understand your requirement of "Excess Margin %". I have not hear this term before.

So I have calculated the operating margin as per table below. Please see the table below.

Operating profit is otherwise known as EBIT or Earnings before interest and taxes.

Parameter	2019
Revenue
Client Services−Gross	2,366,410
Contractual Allowances	72,565
Patient Revenue−Net	2,293,845
Other Revenue−Imaging	246,454
Total Revenue    (A)	2,540,299
Operating Expenses
Salaries and Wages	1,292,372
Staff Benefits	339,904
Administrative Expenses	18,330
Advertising	34,000
Collection Fees	1,267
Computer Support	42,668
Consultants	1,529
Equipment Leases	10,400
Insurance	28,100
Laboratory	64,882
Laundry and Housekeeping	12,830
Legal/Audit	8,100
Medical Supplies	61,450
Office Supplies	18,437
Printing and Postage	4,222
Professional Fees	23,955
Rent	78,500
Repairs and Maintenance	3,167
Telephone	2,766
Utilities	18,925
Bad Debt Expenses	2,437
Total Expenses (B)	2,068,241
Operating Profit ( C) = (A) - (B)	472,058
Operating Margin ( C) / (A)	18.58%