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:
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BREAKING DOWN '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 profitlevel indicators will ensure a higher level of validity.
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