Operating profits refer to the net income after accounting for the cost of production, operational expenses, wages, etc., and before taxes. This gives an insight into the company’s operational efficiency and income generated against capital investment. \r\rA higher operating margin is a good indicator of how the business and its resources are being managed. Startups and new-to-market businesses that raise equity are in the stage where they are deploying capital and probably years away from seeing any significant revenue. These businesses are most vulnerable during market corrections or economic uncertainty as they do not have any financial cushion. Risk-averse investors should look for businesses with an operating margin of at least 12-15% or more.