# Components of Operating Ratio

Operating ratio is computed by dividing operating expenses by net sales. It is expressed in percentage.A ratio that shows the efficiency of a company’s management by comparing operating expense to net sales.

## Operating Ratio

Definition: Operating ratio is the ratio of cost of goods sold plus operating expenses to net sales. It is generally expressed in percentage. Operating ratio measures the cost of operations per dollar of sales. This is closely related to the ratio of operating profit