Operating Ratio
Calculate the operating ratio, a financial metric that measures the efficiency of a company’s operations by comparing its operating expenses to its revenue.
The operating ratio is calculated by dividing the company’s operating expenses by its net sales and multiplying by 100 to express it as a percentage. It provides insight into how efficiently a company is managing its operations.
The formula is as follows:
\[\text{Operating Ratio} = (\text{Operating Expenses} + \text{Cost of Goods Sold}) / \text{Revenue}\]Also known as: operating efficiency ratio, operating expense ratio.
Operating Ratio in Python
Install the Finance Toolkit with:
pip install financetoolkit -U
Then call get_operating_ratio as shown below.
from financetoolkit import Toolkit
toolkit = Toolkit(["AAPL", "TSLA"], api_key="FINANCIAL_MODELING_PREP_KEY")
operating_ratios = toolkit.ratios.get_operating_ratio()
Which returns:
| 2021 | 2022 | 2023 | 2024 | 2025 | |
|---|---|---|---|---|---|
| AAPL | 0.7022 | 0.6971 | 0.7018 | 0.6849 | 0.6803 |
| TSLA | 0.8793 | 0.8324 | 0.9081 | 0.9276 | 0.9541 |
Parameters
The function accepts the following parameters:
- rounding (int, optional): The number of decimals to round the results to. Defaults to 4.
- growth (bool, optional): Whether to calculate the growth of the ratios. Defaults to False.
- lag (int | str, optional): The lag to use for the growth calculation. Defaults to 1.
- standardize (bool, optional): Whether to standardize (Z-Score) the result. When combined with growth=True, standardizes the growth values instead of the raw values. Defaults to False.
- trailing (int): Defines whether to select a trailing period. E.g. when selecting 4 with quarterly data, the TTM is calculated.