Operating expense ratio is

Operating Expense Ratio is calculated as:

Operating Expense Ratio = $\frac{\text{Operating Expenses}}{\text{Net Sales}} \times 100$

Both components of this ratio - Operating Expenses and Net Sales - are derived from the Income Statement (Trading and Profit & Loss Account).

Classification of Ratios:

Income Statement Ratios: Both items are from the Income Statement

• Examples: Gross Profit Ratio, Net Profit Ratio, Operating Ratio, Operating Expense Ratio

Balance Sheet Ratios: Both items are from the Balance Sheet

• Examples: Current Ratio, Debt-Equity Ratio, Proprietary Ratio

Mixed Ratios: One item from Income Statement and one from Balance Sheet

• Examples: Return on Investment, Inventory Turnover Ratio, Debtors Turnover Ratio

Since both Operating Expenses and Net Sales appear in the Income Statement, Operating Expense Ratio is classified as an Income Statement Ratio.