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Describe What Operating Ratios Are

question 108

Essay

Describe what operating ratios are.Identify the five operating ratios covered in your text,explaining how each of the five helps the small business owner manage his/her business.


Definitions:

Average Variable Cost

The total variable costs divided by the quantity of output produced, representing the variable cost per unit.

Average Total Cost

The total cost of production divided by the quantity of output produced, encompassing both fixed and variable costs.

Total Revenue

The total income a firm receives from selling its products; calculated as the quantity sold multiplied by the price per unit.

Total Cost

The sum of fixed and variable costs incurred by a business in the production of goods or services.

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