What does the expenses ratio measure?

The expenses ratio specifically measures the relationship between operating expenses and revenue, essentially indicating how much of the revenue is consumed by operating expenses. This ratio is crucial for assessing the efficiency of a business in managing its operating costs relative to the income it generates. A lower expenses ratio typically signifies more efficient cost management, as the business retains a larger proportion of its revenue as profit after covering operating expenses.

The other options do not accurately reflect what the expenses ratio measures. For example, sales revenue divided by total expenses would not indicate expenses efficiency, while net income divided by total assets focuses on profitability and asset efficiency rather than expenses management. Similarly, calculating cost of goods sold divided by total expenses does not provide insights specific to operating expenses in relation to overall revenue. Thus, the measure defined by operating expenses divided by revenue is the one that accurately reflects the expenses ratio.