Operating ratio: Difference between revisions
imported>Rublov Adding short description: "Operating expenses as percent of revenue" |
imported>InternetArchiveBot Rescuing 0 sources and tagging 1 as dead.) #IABot (v2.0.9.5 |
||
| Line 4: | Line 4: | ||
The operating ratio can be used to determine the efficiency of a company's management by comparing operating expenses to [[sales (accounting)|net sales]]. It is calculated by dividing the operating expenses by the net sales. The smaller the ratio, the greater the organization's ability to generate [[profit (accounting)|profit]]. The ratio does not factor in expansion or debt repayment.<ref>[http://www.investopedia.com/terms/o/operatingratio.asp Operating ratio]. Investopedia.</ref> | The operating ratio can be used to determine the efficiency of a company's management by comparing operating expenses to [[sales (accounting)|net sales]]. It is calculated by dividing the operating expenses by the net sales. The smaller the ratio, the greater the organization's ability to generate [[profit (accounting)|profit]]. The ratio does not factor in expansion or debt repayment.<ref>[http://www.investopedia.com/terms/o/operatingratio.asp Operating ratio]. Investopedia.</ref> | ||
Alternatively, it may be expressed as a ratio of sales to cost. In such case, a higher ratio indicates a better ability to generate revenue.<ref>[http://www.investorwords.com/3466/operating_ratio.html Operating Ratio]. InvestorWords.</ref> | Alternatively, it may be expressed as a ratio of sales to cost. In such case, a higher ratio indicates a better ability to generate revenue.<ref>[http://www.investorwords.com/3466/operating_ratio.html Operating Ratio]{{Dead link|date=August 2025 |bot=InternetArchiveBot |fix-attempted=yes }}. InvestorWords.</ref> | ||
==See also== | ==See also== | ||
Latest revision as of 02:09, 14 August 2025
Template:Short description In finance, the operating ratio is a company's operating expenses as a percentage of revenue. This financial ratio is most commonly used for industries which require a large percentage of revenues to maintain operations, such as railroads.[1] In railroading, an operating ratio of 80 or lower is considered desirable.
The operating ratio can be used to determine the efficiency of a company's management by comparing operating expenses to net sales. It is calculated by dividing the operating expenses by the net sales. The smaller the ratio, the greater the organization's ability to generate profit. The ratio does not factor in expansion or debt repayment.[2]
Alternatively, it may be expressed as a ratio of sales to cost. In such case, a higher ratio indicates a better ability to generate revenue.[3]
See also
References
<templatestyles src="Reflist/styles.css" />
- ↑ Script error: No such module "citation/CS1".
- ↑ Operating ratio. Investopedia.
- ↑ Operating RatioScript error: No such module "Unsubst".. InvestorWords.
Script error: No such module "Check for unknown parameters".