How to Figure Out the Programs & Expense Ratio

by Charlotte Johnson

Companies that offer particular programs experience expenses that are necessary for the operation of those programs. These expenses are known as "program expenses." If program expenses get too high, the program may no longer be profitable. One way to analyze the expenses of a program is to compare those expenses to total expenses of the company. This type of comparison is usually calculated in the form of a ratio, which may or may not be converted to a percentage.

1. Add the expenses associated with running a particular program. Businesses and charities often report these expenses in quarterly or annual reports.

2. Total all of the expenses of the business, including the program expenses for the program that you are examining.

3. Place your total from step one as the numerator (top number) in a fraction and the total from step two as the denominator (bottom number) in a fraction. For example, consider a company that spends $20,000 a year to operate Program A and $100,000 a year on all of its expenses. This ratio would be stated as 20,000/100,000, or 1/5. Sometimes ratios also are stated with a colon, as follows: 1:5.

4. Divide the numerator of the ratio by the denominator and multiply times 100 if you must state the ratio as a percentage as well. In this example, you would divide 1 by 5 to get 0.2. Multiply 0.2 times 100 to get 20 percent.

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