# Define Operating Ratio

The operating ratio is an economic term described as a company’s operating expenses as a fraction of revenue. This economical ratio is most usually second-handed for industries which necessitate a large percentage of revenues to preserve operations, such as railroads. In railroading, an operating ratio of 80 or lesser is measured attractive.

## 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