Stock-Based Compensation Ratio
Calculate the stock-based compensation (SBC) to revenue ratio, an efficiency ratio that measures how much of a company’s revenue is being used to compensate employees through non-cash equity awards.
A high or rising SBC-to-revenue ratio is a common quality-of-earnings flag, particularly for technology companies, since SBC is added back in cash flow from operations but represents real economic dilution for shareholders.
The formula is as follows:
\[\text{SBC to Revenue Ratio} = \text{Stock Based Compensation} / \text{Revenue}\]Also known as: SBC intensity, equity compensation ratio.
Stock-Based Compensation Ratio in Python or via the MCP
Install the Finance Toolkit with:
pip install financetoolkit -U
Then call get_stock_based_compensation_ratio as shown below.
from financetoolkit import Toolkit
toolkit = Toolkit(
["UBER", "LYFT", "DASH"],
api_key="FINANCIAL_MODELING_PREP_KEY",
start_date="2021-01-01",
end_date="2025-12-31",
)
toolkit.ratios.get_stock_based_compensation_ratio()
Or, after setting up the Finance Toolkit MCP, ask:
How much of their revenue did Uber, Lyft and DoorDash pay out as stock-based compensation from 2021 to 2025?
Which returns:
| 2021 | 2022 | 2023 | 2024 | 2025 | |
|---|---|---|---|---|---|
| DASH | 0.0994 | 0.135 | 0.126 | 0.1025 | 0.0766 |
| LYFT | 0.2258 | 0.1833 | 0.11 | 0.0572 | 0.051 |
| UBER | 0.0669 | 0.0562 | 0.0519 | 0.0408 | 0.0351 |
Parameters
get_stock_based_compensation_ratio accepts the following parameters.
| Parameter | Type | Description | Example |
|---|---|---|---|
rounding | int | None | The number of decimals to round the results to. Defaults to None, which uses the rounding of the Toolkit (4 unless set otherwise). | 2 |
growth | bool | Whether to calculate the growth of the ratios. Defaults to False. | True |
lag | int | list[int] | The lag to use for the growth calculation. Defaults to 1. | 4 |
compound | bool | Whether the growth is the compound annual growth rate over the lag (e.g. lag=5 for the five-year CAGR) instead of the total change. Defaults to False. | False |
standardize | bool | Whether to standardize (Z-Score) the result. When combined with growth=True, standardizes the growth values instead of the raw values. Defaults to False. | True |
trailing | int | The number of periods to sum flows (income and cash flow statement items) over, with balance sheet items averaged over the same number of period ends. E.g. 4 with quarterly data gives the trailing twelve months (TTM) and 3 with annual data a three-year cumulative figure. Defaults to None, which uses single-period flows (per quarter and not annualized with quarterly data). | 4 |