![]() ![]() (General and Administrative Expenses / Revenue) x 100 This is also known as the efficiency ratio. The easiest way to measure business efficiency relating to general and administrative expenses is to calculate operating costs against company revenue. This helps analysts examine the relationship between the cost of goods sold and operational expenses, without considering ‘selling expenses’. Useless on their own, G&A expenses fit into the overall efficiency of the business through revenue. To better understand G&A expenses, it’s important to provide more context. Measuring General and Administrative Expense Fees and interest are also kept as a separate one-line item on any income statement. The costs associated with manufacturing the product or service, for example, as well as a company’s investment expenses are categorized differently from G&A expenses. Other examples of common G&A expenses include: This is because operational fees are a fixed cost that occur with or without sales. Marketing costs are also noted in the general and administrative expenses section of accounting. These are the costs associated with running a business and keeping the employees comfortable. G&A expenses have no direct impact on the profit (thus are indirect costs) but instead refer to the efficiency of the business.įor example, general and administrative expenses include rent, utilities, insurance, salaries, and more. “Selling General Administrative Expense (SG&A): $2500” Examples of General and Administrative Expensesīut in reality, they are completely separate.
0 Comments
Leave a Reply. |