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
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(["AAPL", "TSLA"], api_key="FINANCIAL_MODELING_PREP_KEY")
sbc_ratios = toolkit.ratios.get_stock_based_compensation_ratio()
Which returns:
| 2021 | 2022 | 2023 | 2024 | 2025 | |
|---|---|---|---|---|---|
| AAPL | 0.0216 | 0.0229 | 0.0283 | 0.0299 | 0.0309 |
| TSLA | 0.0394 | 0.0192 | 0.0187 | 0.0205 | 0.0298 |
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.