# What Does the Operating Expense Ratio Measure?

The operating expense ratio (OER) is a financial ratio that measures how much of a company's revenue is spent on operating expenses. Operating expenses include things like rent, salaries, and utilities. The OER is calculated by dividing a company's operating expenses by its revenue. A higher OER means that a greater percentage of the company's revenue is being spent on operating expenses.

The OER is a useful metric for assessing a company's efficiency. A company with a low OER is generally considered to be more efficient than a company with a high OER. The OER can also be used to compare companies in the same industry. All else being equal, a company with a lower OER is usually considered to be a better investment than a company with a higher OER. How is an operating ratio calculated and how is it used? Operating ratio is a financial ratio that is used to measure a company's operational efficiency. The operating ratio is calculated by dividing a company's operating expenses by its operating income. The resulting number is then expressed as a percentage.

The operating ratio is used to evaluate a company's efficiency in using its resources to generate income. A low operating ratio indicates that a company is efficient in its use of resources and is able to generate a higher income. A high operating ratio indicates that a company is less efficient in its use of resources and is not able to generate as high of an income. What is the other name of operating ratio? The other name of operating ratio is operating expenses ratio. This ratio is a measure of a company's operating expenses as a percentage of its total revenue.

Which are the two classifications of operating expenses? There are two classifications of operating expenses: direct and indirect. Direct operating expenses are those that are directly related to the production of goods or services, while indirect operating expenses are those that are not directly related to the production of goods or services.

### What is a good operating efficiency ratio?

There is no one-size-fits-all answer to this question, as the ideal operating efficiency ratio will vary depending on the specific industry and sector in which a company operates. However, as a general rule of thumb, a good operating efficiency ratio is typically considered to be any ratio that is above average for the particular industry or sector. Where is operating expenses on financial statements? Operating expenses are found on the income statement of a company's financial statements. They represent the costs associated with running the company's day-to-day operations.