SG&A to Sales Ratio

Definition: SG&A to Sales is the ratio of selling, general and administrative costs to sales. Selling, general, and administrative (SG&A) expenses represent most operating expenses including marketing costs, employee salaries, pension costs, insurance, etc.

Formula:

SG&A to Sales Ratio = (Selling, General & Administrative Expenses) / (Sales)

Example:
CPM Ltd has the following data:
Sales $125,000
Sales returns $25,000
Salaries $30,000
Pension costs $10,000
Marketing costs $5,000
Insurance expenses $4,000
Rental expenses $6,000
Depreciation of Fixed Assets $1,000

Then,
SG&A = 30,000 + 10,000 + 5,000 + 4,000 + 6,000 + 1,000 = $56,000
Net sales = 125,000 - 25,000 = $100,000
SG&A Expense to Net Sales Ratio = 56,000 / 100,000 = 56%

* Next: COGS to Sales Ratio
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