Finance & Businessfreq · 1via Dusty Flow

Operating Ratio

/ˈɒp.ə.reɪ.tɪŋ ˈreɪ.ʃi.oʊ/noun
ELI5 mode

The operating ratio is a financial metric that measures a company's operational efficiency by dividing its operating expenses by net sales, typically expressed as a percentage. This ratio highlights how much of a company's revenue is consumed by day-to-day costs, with lower values signaling better cost control and potential profitability; in today's volatile markets, it's a go-to tool for investors analyzing sectors like retail or manufacturing where slim margins make every penny count.

AI-generated·

Verified sources

Your usage frequency

1 / 917