Berry Ratio

AAA

DEFINITION of 'Berry Ratio'

The ratio of a company's gross profits to operating expenses. This ratio is used as an indicator of a company's profits in a given period of time. A ratio coefficient of 1 or more indicates that the company is making profit above all variable expenses, whereas a coefficient below 1 indicates that the firm is losing money.

The formula is as follows:

Berry Ratio



INVESTOPEDIA EXPLAINS 'Berry Ratio'

This ratio attempts to measure a firm's profitability. A higher coefficient means that the firm is more profitable, while a lower coefficient means the firm in not as profitable. Using this method in conjunction with other profit-level indicators will ensure a higher level of validity.

RELATED TERMS
  1. Profit

    A financial benefit that is realized when the amount of revenue ...
  2. Gross Margin

    A company's total sales revenue minus its cost of goods sold, ...
  3. Expense

    1. The economic costs that a business incurs through its operations ...
  4. Expense Ratio

    A measure of what it costs an investment company to operate a ...
  5. Variable Cost

    A corporate expense that varies with production output. Variable ...
  6. Operating Expense

    A category of expenditure that a business incurs as a result ...
Related Articles
  1. Ratio Analysis Tutorial
    Fundamental Analysis

    Ratio Analysis Tutorial

  2. Understanding The Income Statement
    Forex Education

    Understanding The Income Statement

  3. Understanding The P/E Ratio
    Markets

    Understanding The P/E Ratio

  4. Using Normal Distribution Formula To ...
    Investing Basics

    Using Normal Distribution Formula To ...

comments powered by Disqus
Hot Definitions
  1. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  2. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
  3. Days Payable Outstanding - DPO

    A company's average payable period. Calculated as: ending accounts payable / (cost of sales/number of days).
  4. Net Sales

    The amount of sales generated by a company after the deduction of returns, allowances for damaged or missing goods and any ...
  5. Over The Counter

    A security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, etc. The phrase "over-the-counter" ...
  6. Earnings Before Interest After Taxes - EBIAT

    A financial measure that is an indicator of a company's operating performance. EBIAT, which is equivalent to after-tax EBIT ...
Trading Center