Key Performance Indicators (KPI)

16

Operating expense ratio (OER)

Strategic perspective

Financial perspective

Key performance question this indicator helps to answer

How well are we managing our operating expenses?

Why is this indicator important?

Companies incur ongoing costs of running their business including equipment maintenance costs, sales and advertising costs, research and development costs, licence costs, insurance premiums, legal fees, accounting expenses, rent, travel costs, electricity and water rates, IT support, etc. These costs are called operating expenses (OPEX) and encompass all the day-to-day expenses a company needs to pay to operate. This therefore means that the lower a company’s operating expenses are, the more profitable it generally is.

Operating ...