operating ratio

Operating Ratio

A ratio that shows the efficiency of management by comparing operating expense to net sales:

Notes:

The smaller the ratio, the greater the organization's ability to generate profit if revenues decrease. When using this ratio, however, investors should be aware that it doesn't take into account debt repayment or expansion.

See also: Net Sales, Operating Expense, Profit Margin

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Operating ratio

A ratio that measures a firm's operating efficiency.

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operating ratio

A financial ratio that measures the portion of revenue going to operating expenses.