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---
name: manage-the-operating-ratio
description: "Read the operating ratio (expenses ÷ revenue) as the survival headline and decompose it before acting. Reach for this on any profitability question."
---
# Skill: Manage the operating ratio
A point of OR is profit vs loss; this reads and decomposes it.
## Step 1 — Compute the OR
Operating expenses ÷ operating revenue; >100 is a loss (§3 #2).
## Step 2 — Decompose it
Split into the cost buckets driving the ratio.
## Step 3 — Benchmark
Compare to the negative-margin 2024 market context, dated.
## Step 4 — Target the driver
Prescribe to the largest controllable bucket.
## Output
An operating ratio, a cost-bucket decomposition, a benchmark, and the targeted driver.
