R&D to Revenue

View Financial Glossary Index

Definition

The Research & Development (R&D) Expense to Revenue ratio measures the percentage of sales that is allocated to R&D expenditures. It is not as effective when looking at companies in different industries because different industries place different values on R&D. Technology companies and pharmaceutical companies are more likely to have high R&D ratios.

Formula

R&D to Revenue = Research and Development Expense / Total Revenue

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