Expense Ratio Calculator
Divides total operating expenses by revenue to give the expense ratio as a percentage and also shows the net income that remains.
Recent
Formula
How the calculation works
The calculator divides the total expense by the revenue and multiplies by one hundred to express the result as a percentage.
It also subtracts the total expense from the revenue so you can see the net income left after all costs.
The ratio shows how many paisa of every taka earned are consumed by running the business.
Common mistakes
- Mixing up revenue and expense in the two fields, which gives a ratio above one hundred percent and a negative net income.
- Comparing the ratio across different industries, since capital-heavy firms naturally carry higher expense ratios than service firms.
When to use it
- Use it to track whether overheads are growing faster than sales across the months of a financial year.
- Use it when comparing two branches to find which one keeps its running costs lowest relative to its revenue.
Worked example
With revenue 500000 and expenses 350000, the expense ratio is 70 percent and net income is 150000 taka.
Common questions
What is a good expense ratio?
There is no single good figure, but a lower ratio means more of each taka of revenue survives as profit after running costs.
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