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Income statement (deeper)

Selling, General & Administrative Expense SG&A

The overhead of running and selling — salaries, marketing, rent, and admin costs not tied to making the product.

Part of the Reading Financial Statements course · Lesson 9 of 33
Formula
SG&A % of Revenue = SG&A ÷ Revenue

What it is

SG&A covers the operating costs of selling products and running the company that are not part of the direct cost of making the product. It includes things like sales-team salaries and commissions, advertising and marketing, office rent, legal and accounting fees, and executive pay. It sits below gross profit on the income statement.

Why it matters

SG&A as a share of revenue shows how much overhead it takes to generate sales; a falling ratio as revenue grows is a sign of scale and discipline. Bloated or fast-rising SG&A can quietly erode operating margins even when sales are growing.

How it's calculated

It is reported directly on the income statement, often split into selling expense and general & administrative expense; analysts typically track it as a percentage of revenue.

How Quintarthai uses it

SG&A and its trend versus revenue are visible on the Financials 10-yr tab of a company's deep-analysis page, useful for spotting cost discipline over time — open a company page.

Cross-border note. Under US GAAP and IFRS (common for Canadian filers) the line is built the same way, but companies differ in what they fold into SG&A versus cost of goods sold or R&D, so compare the ratio's trend within a company before comparing the absolute level across companies.

FAQ

Is R&D part of SG&A?
No. Research & development is usually reported as its own line item, separate from SG&A, because investors want to see innovation spending distinctly. Some companies report a combined 'operating expenses' figure, but most break R&D out on its own.
What does it mean if SG&A grows faster than revenue?
It usually signals shrinking operating leverage — overhead is rising faster than sales, which compresses operating margin. Persistent overshoot can point to weak cost control or heavy spending to chase growth.
Related terms
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