How to Use the SG&A Expense Ratio Calculator
The SG&A ratio shows selling, general, and administrative expenses as a share of revenue. Because operating income is gross profit minus SG&A, this is the line that explains where the money goes after the product itself is paid for.
SG&A covers salaries and payroll taxes for selling and administrative staff, rent and occupancy, advertising and promotion, depreciation on office assets, professional fees, utilities, and supplies. Anything spent making or buying the goods themselves belongs in COGS instead.
Payroll is the item most often misplaced. Wages for production or kitchen staff sit in COGS, while store management, sales, and back-office salaries are SG&A. Rent splits the same way: factory rent is a production cost, headquarters rent is SG&A.
The breakdown table makes it obvious which line is consuming revenue. If sales grew but the ratio climbed with them, fixed overhead probably stepped up at the same time. These results reflect only what you enter, so confirm account classification with your accountant.
Frequently Asked Questions
Costs incurred to make or acquire the product are COGS; costs incurred to sell it and run the company are SG&A. Factory rent and production wages go in COGS, while corporate rent and sales or administrative salaries go in SG&A.
It varies enormously by industry โ low for manufacturers, much higher for retail, services, and advertising-heavy models. Compare against sector peers and against your own prior quarters rather than against a single benchmark.