It should be used only to compare firms within specific industry groups and in conjunction with other operating ratios to determine the effective employment of assets. The only time a zero will appear in the array will be when the net sales figure is low and the quotient rounds off to zero. The ratio values cannot be negative. They are arrayed from the highest to the lowest positive values. The following two ratios relate specific expense items to net sales and express this relationship as a percentage.
Comparisons are convenient because the item, net sales, is used as a constant.
This includes drawings of partners and proprietors.