* Is High or Low Best: Lower is Better
SG&A Expense as a Percentage of Revenue measures the SG&A expense that is incurred relative to the dollar amount of revenue the company generated over the same period of time. High values for this metric can be indicative of highly manual (i.e., errors and rework prone) sales and operational processes, excessive time spent on low-value work (e.g., printing, scanning, etc.), overstaffing and/or general inefficiencies within the sales or administrative processes (e.g., salary distribution, inefficient travel management, utilities and insurance payments, inefficient advertising processes, etc.). While companies typically seek to streamline operations and employee positions to reduce SG&A expenses, great care should be taken when doing so as too many layoffs can have a negative impact on company morale.
The sales, general and administrative-related expenses incurred divided by the total sales generated by the company over the same period of time, as a percentage. SG&A are the costs that occur during the daily operations of a company and not directly related to the manufacturing of the product (i.e., shipping supplies, sales commissions, product advertising, salaries of sales representatives, overhead costs, etc.).
Two values are used to calculate this KPI: (1) the total sales, general and administrative-related expense incurred by the company, and (2) the dollar amount of revenue generated by the company over the same period of time. Selling expenses can be broken down to direct (only occurs when a product is sold and includes shipping supplies, delivery charges and sales commissions) and indirect costs (costs that occur throughout the manufacturing process and after the product is finished, i.e., product advertising and marketing, telephone bills, travel costs and the salaries of sales representatives) associated with the selling of a product. General and administrative (G&A) expenses refers to the overhead of the company (i.e., rent/mortgage payments, utilities, insurance and the salaries of all non-sales employees).
(SG&A Expense Incurred / Revenue Generated) * 100
Let us take your KPIs & business intelligence efforts to the top.
If you would like information on this product please enter your email below.