Glossary Terms

Operating Performance Ratio

A company’s operating performance ratio is figured by dividing operating expenses by net sales. It is intended to illustrate the efficiency of the company’s management.

A company’s operating performance ratio is figured by dividing operating expenses by net sales. It is intended to illustrate the efficiency of the company’s management.

It is thought that the lower the operating performance ratio, the greater the company’s ability to create profit, even if revenues decrease. However, this measurement does not give a full picture of potential, as it does not take into account company growth or debt repayment.