ACCOUNTING TERMS - ACCOUNTING DICTIONARY - ACCOUNTING GLOSSARY
From the web's #1 provider of financial analysis / ratio analysis
OPERATING EXPENSE TO SALES Definition
OPERATING EXPENSE TO SALES reports the operating expenses as a percent of Net Revenues. This then is a measure of the total overhead employed in the firm per Net Sales Revenue Dollar; thereby giving an indication of the efficiency of the cost structure of the company. It gives an indication of the ability of a business to convert income into profit. Generally, businesses with low ratios will generate more profit than others. In general business operations with larger and more stable cash flows can sustain higher ratios than smaller and less stable operations. Scale and income stability are important considerations though it is up to the management of a business to monitor costs in an appropriate manner whatever its size. Formula: Total Overhead Cash Expense / Net Revenues
Learn new Accounting Terms
INVERSE is the opposite or reverse. An inverse relationship between two variables means that when one increases the other decreases.
EXCHANGE RATE RISK, in foreign exchange, is the variability of a firm's value due to uncertain changes in the rate of exchange.