Operating Ratio

Question

Operating Ratio

15 Apr 2024

Answer :

Word Count : 333

The operating ratio is a financial metric used to evaluate the operational efficiency of a company, particularly in the transportation and utility industries. It measures the proportion of a company's revenue that is consumed by its operating expenses. The operating ratio is calculated by dividing the company's operating expenses by its operating revenue (or net sales). The formula for the operating ratio is:

Operating Ratio = Operating Expenses / Operating Revenue

A lower operating ratio indicates higher operational efficiency, as a smaller portion __________ _________ ___ _____ ________ ________ __________.
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