Overhead to revenue (SG&A/revenue)
Selling, general and administrative costs as a share of revenue.
It is the standard read on how lean the business is, and the sixth Beneish variable watches it.
How it is computed here
Selling, general and administrative expense / revenue x 100
Measured over the latest complete fiscal year, as filed. Filed under risk. Lower is the stronger reading, other things equal.
No published threshold exists for this figure, so this page prints none. Read it against the company's own history and its peers instead.
When it misleads
- A high figure is structural in businesses that sell through people rather than through product.
- Cutting it by starving sales and marketing looks like efficiency for about two years.
- There is no cross-industry threshold worth printing. The peer percentile against companies in the same industry is the only defensible reading.
Questions
How is overhead to revenue calculated?
Selling, general and administrative expense / revenue x 100. Measured over the latest complete fiscal year, as filed.
What does overhead to revenue tell a value investor?
It is the standard read on how lean the business is, and the sixth Beneish variable watches it.
When does overhead to revenue mislead?
A high figure is structural in businesses that sell through people rather than through product. Cutting it by starving sales and marketing looks like efficiency for about two years. There is no cross-industry threshold worth printing. The peer percentile against companies in the same industry is the only defensible reading.