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. Variable Cost

    A corporate expense that varies with production output. Variable ...
  2. Expense Ratio

    A measure of what it costs an investment company to operate a ...
  3. Profit

    A financial benefit that is realized when the amount of revenue ...
  4. Expense

    1. The economic costs that a business incurs through its operations ...
  5. Operating Expense

    A category of expenditure that a business incurs as a result ...
  6. Profit Margin

    A ratio of profitability calculated as net income divided by ...
RELATED FAQS
  1. No results found.
Related Articles
  1. Fundamental Analysis

    Ratio Analysis Tutorial

    If you don't know how to evaluate a company's present performance and its possible future performance, you need to learn how to analyze ratios.
  2. Forex Education

    Understanding The Income Statement

    Learn how to use revenue and expenses, among other factors, to break down and analyze a company.
  3. Markets

    Understanding The P/E Ratio

    Learn what the price/earnings ratio really means and how you should use it to value companies.
  4. Economics

    How A Limited Government Affects A Country's Finances

    Countries with limited governments have fewer laws about what individuals and businesses can and can’t do. What's the net result?
  5. Investing Basics

    How Does Goodwill Affect Financial Statements?

    Goodwill is a bit of a paradox--intangible, yet it is recorded as an asset on the purchasing company's balance sheet.
  6. Investing Basics

    Using Normal Distribution Formula To Optimize Your Portfolio

    Normal or bell curve distribution can be used in portfolio theory to help portfolio managers maximize return and minimize risk.
  7. Investing Basics

    R-Squared

    Learn more about this statistical measurement used to represent movement between a security and its benchmark.
  8. Insurance

    The Government And Risk: A Love-Hate Relationship

    Though the U.S. government can help its citizens by subsidizing risky loans, the costs always come back to the taxpayers.
  9. Fundamental Analysis

    Can Good News Be A Signal To Sell?

    Sometimes positive announcements can mean bad news for a stock. Find out why.
  10. Fundamental Analysis

    Ethical Investing Tutorial

    Learn everything there is to know about ethical investing.

You May Also Like

Hot Definitions
  1. Technical Skills

    1. The knowledge and abilities needed to accomplish mathematical, engineering, scientific or computer-related duties, as ...
  2. Prepaid Expense

    A type of asset that arises on a balance sheet as a result of business making payments for goods and services to be received ...
  3. Gordon Growth Model

    A model for determining the intrinsic value of a stock, based on a future series of dividends that grow at a constant rate. ...
  4. Cost Accounting

    A type of accounting process that aims to capture a company's costs of production by assessing the input costs of each step ...
  5. Law Of Supply

    A microeconomic law stating that, all other factors being equal, as the price of a good or service increases, the quantity ...
  6. Investment Grade

    A rating that indicates that a municipal or corporate bond has a relatively low risk of default. Bond rating firms, such ...
Trading Center