The Income|Outcome^® Contextuary

Ratio: (Cost of Sales (COS) + Operating Expense) as a percentage of Sales.

Example: The Round Number Company Sales = 200; COS = 80; OpEx = 72 Operating Ratio = (80 + 72) / 200 = 152/200 = 76 %

The Operating Ratio is a comprehensive measure of a company's operational efficiency.

Lower ratios are generally favorable, indicating better cost management and higher efficiency in generating profit from sales.

“What do you mean by that?”

The terms Operating Ratio and OpEx Ratio sound similar - but they are different measurements!