Definition
SG&A includes sales and marketing costs, executive salaries, rent, utilities, and other overhead. It's subtracted from gross profit to calculate operating income. SG&A as a percentage of revenue indicates operational efficiency. Economies of scale should reduce SG&A as percentage.
Formula
Operating Income = Gross Profit - SG&A - R&D
Example
With $55M gross profit and $30M SG&A (including $15M sales/marketing, $10M admin, $5M other), operating income before R&D is $25M.
FAQ
What is SG&A (Selling, General & Administrative)?
Operating expenses not directly tied to production.
How do you calculate SG&A (Selling, General & Administrative)?
A common formula for SG&A (Selling, General & Administrative) is: Operating Income = Gross Profit - SG&A - R&D
Why is SG&A (Selling, General & Administrative) important?
SG&A (Selling, General & Administrative) helps investors evaluate financial statements and make more informed decisions.