Calculation of Operating Ratio in Service Firms
Sahr Dauda, Student (University), Sierra Leone, Member
Even in service firms there are products, though they may not be tangible goods. And expenses must have been incurred to make these "goods" (or make the services possible) that brings in the revenue.
Define the expenses and define the revenues. You now know your sales and your expense, so you can get your profit.
A ratio of this profit in relation to your sales generated (sales) will give your operating ratio.
