Resources / Beef / Operating expense ratio
Beef · Financial · Efficiency

Operating expense ratio

75%

Total farm operating costs expressed as a percentage of gross enterprise revenue — answering how many cents of every dollar earned are eaten up by running costs.

Worked example · $760 costs ÷ $1,020 revenue
75% Expenses 75% Margin 25%
$760 costs ÷ $1,020 revenue
The benchmark

Top-performing operations keep operating costs below 65–70% of gross income; industry averages sit at 78–85%.

Agriculture Victoria LFMP ↗
What it signals

A lower ratio reveals true financial resilience: it builds a cash cushion to cover interest, fund improvements and ride out dry periods, keeping the focus on an efficient system rather than chasing revenue with expensive inputs.

Data required to calculate
Total operating expenses$Depreciation of assets$Gross revenue$

Silo pulls each of these from the sources the operation already uses, and keeps the figure current automatically.

How to improve it
01

Increase total liveweight produced to dilute fixed overhead per kilogram.

02

Review large overhead expenses and seek cheaper contract alternatives.

03

Benchmark input purchases through competitive quoting.

Questions & answers

What is operating expense ratio?

Total farm operating costs expressed as a percentage of gross enterprise revenue — answering how many cents of every dollar earned are eaten up by running costs.

What data do you need to calculate operating expense ratio?

You need: Total operating expenses ($), Depreciation of assets ($), Gross revenue ($). Silo pulls each of these from the sources the operation already uses and keeps the figure current automatically.

What is a good operating expense ratio benchmark?

Top-performing operations keep operating costs below 65–70% of gross income; industry averages sit at 78–85%.

How do you improve operating expense ratio?

Increase total liveweight produced to dilute fixed overhead per kilogram. Review large overhead expenses and seek cheaper contract alternatives. Benchmark input purchases through competitive quoting.

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