OPERATING EXPENSE TO SALES Definition

Bookmark and Share

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

APPLIED RESEARCH is designed to solve practical problems of the modern world, rather than to acquire knowledge for knowledges sake.

BUDGET PERFORMANCE REPORT is the comparison of planned budget and actual performance.

Suggest a Term

Enter Search Term

Enter a term, then click the entry you would like to view.