A bank feels that a firm has expenses that are too high.What ratio are they most likely to examine to address this concern?

Question

Quizplus · Accepted Answer

The ratio of Selling and administrative expenses to Net sales is commonly known as the Operating Expense Ratio. It measures a company's efficiency in managing its operating expenses in relation to its revenue. A high ratio indicates that the firm is spending a large portion of its revenue on expenses, which may cause concern for the bank. Therefore, this ratio is most likely to be examined to address the bank's concern about the firm's high expenses.

A Bank Feels That a Firm Has Expenses That Are