DEFINITION of 'Working Ratio'
A ratio used to measure a company's ability to recover operating costs from annual revenue. This ratio is calculated by taking the company's total annual expenses (excluding depreciation and debtrelated expenses) and dividing it by the annual gross income:
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BREAKING DOWN 'Working Ratio'
A working ratio below 1 implies that the company is able to recover operating costs, whereas a ratio above 1 reflects the company's inability to do so.
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