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Meaning / Definition of

Overhead Ratio

Categories: Accounting,

operating expenses divided by the sum of taxable equivalent net interest income and other operating income. This ratio shows the proportion of expenses, in relation to total income, that cannot be allocated directly to production of the good or service. operating expenses include items such as office rent, maintenance of machinery, depreciation costs, etc. In general, companies want to minimize these costs since it is difficult to quantify the revenues generated by undertaking these costs.

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