operating expense ratio


Also found in: Acronyms.

operating expense ratio

The ratio between operating expenses and potential gross income.Such ratios will generally be similar among properties or businesses in the same geographical area with the same or similar characteristics.Knowledge of such ratios allows a developer or entrepreneur to create a pro forma estimate of future income and expenses for a new business.It also allows a property owner to conduct a reality check of its own operations,to see if its own operating expense ratios are consistent with those of other properties in the local marketplace. (An operating expense ratio that is higher than expected may be an indication of inefficiency, embezzlement, or pricing one's goods and services too cheaply.)

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If interest expense is part of total operating expenses, the total interest expense (including adjustments) must be subtracted from operating expenses in the operating expense ratio.
If revenues are too low or expenses too high, consider that the operating expense ratio shows the relationship between revenues and expenses, while the expenses per resident-day index is based solely on operating expenses.
Although nursing homes have a wide range of expenses, making it extremely difficult to compare the subject with other nursing homes line by line, at the very least the appraiser should discuss total operating expense ratios of the subject and other nursing homes.
The operating expense ratio measures the steepness of a line extending from the origin (where the vertical and horizontal axes intersect) to a point on the left-side OE curve.
The sale having the most similar gross income, vacancy level, and operating expense ratio on a square-foot basis is called the most comparable and the unit indicator from this sale is applied to the subject.
Combined ratio is defined as the sum of the technical ratio and the other operating expense ratio.
Institutional investors estimated the company's operating expense ratio for this year to stand at 16% and annual gross margin at around 30%.
If your operating expense ratio is higher than 65 percent but your operating expenses per resident day are "normal," chances are you are collecting abnormally low revenues, and it may be time to revisit your pricing strategy.
Its 2010 operating expense ratio decreased from 2009, but it still stood at around 50%.
The margin downturn is projected to be partially offset by significant improvement in the operating expense ratio.
Retail gross margin is expected to decline moderately, with offsetting improvement in the operating expense ratio.
5%, but consolidated gross margin is expected to continue to decline, partially offset by significant improvement in the operating expense ratio.
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