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In finance, the operating ratio is a company's operating expenses as a percentage of revenue. This financial ratio is most commonly used for industries which require a large percentage of revenues to maintain operations, such as railroads. [1] In railroading, an operating ratio of 80 or lower is considered desirable.
A good operating margin is needed for a company to be able to pay for its fixed costs, such as interest on debt. A higher operating margin means that the company has less financial risk. Operating margin can be considered total revenue from product sales less all costs before adjustment for taxes, dividends to shareholders, and interest on debt.
The efficiency ratio indicates the expenses as a percentage of revenue (expenses / revenue), with a few variations – it is essentially how much a corporation or individual spends to make a dollar; entities are supposed to attempt minimizing efficiency ratios (reducing expenses and increasing earnings). The concept typically applies to banks.
Operating margin, Operating Income Margin, Operating profit margin or Return on sales (ROS) [9] [10] Operating Income / Net Sales Operating income is the difference between operating revenues and operating expenses, but it is also sometimes used as a synonym for EBIT and operating profit. [11] This is true if the firm has no non ...
If a company has $1,000,000 in revenue, $600,000 in COGS, and $200,000 in operating expenses. Operating profit is $200,000, and operating profit margin is (200,000 / 1,000,000) x 100 = 20%. Net profit margin
The earnings decline was in part due to a 7% increase in operating expenses, like a $438 million "restructuring and other" expense. As a result, PayPal's operating margin fell from 16.9% in 2023 ...
The farebox recovery ratio (also called fare recovery ratio, fare recovery rate or other terms) of a passenger transportation system is the fraction of operating expenses which are met by the fares paid by passengers. It is computed by dividing the system's total fare revenue by its total operating expenses. [1]
We reduced operating expenses by $88 million or 8% for the year prior to restructuring costs. Full year adjusted EBITDA declined 6% to $120 million, driven by the 11% net sales decline, partially ...