Financial Glossary
SG&A Ratio
The SG&A ratio divides selling, general, and administrative expenses by total revenue, expressed as a percentage. It measures how much of each sales dollar is consumed by overhead such as salaries, marketing, rent, and office costs that are not tied directly to producing the product or service. A lower ratio generally signals tighter operating efficiency.
Problem & Application
For owner-operated businesses, the SG&A ratio is a quick way to see whether overhead is creeping up faster than sales. A hospitality or campground operator can use it to benchmark administrative costs against revenue year over year and catch bloat before it erodes margins. Watching the trend, rather than a single number, is what surfaces problems early.
In Short
The SG&A ratio is a fast read on whether your overhead is scaling sensibly with revenue. Tracking it keeps cost discipline visible instead of buried in the expense detail.