Selling, General & Administrative Expenses (SG&A)

RECENT NEWS
Forbes  Nov 20  Comment 
Based on these results, we have updated our outlook for both the top-line and bottom-line, as well. We expect Groupon’s EBITDA margins to show improvement in the coming years as operating leverage should lead to decline in marketing and SG&A...
newratings.com  Nov 12  Comment 
WASHINGTON (dpa-AFX) - Macy's, Inc. (M) Wednesday reported third-quarter earnings which increased, as a decline in SG&A costs masked lower sales. Earnings also topped analysts' estimates, while sales fell short. The company, however,...
newratings.com  Nov 12  Comment 
OTTAWA (dpa-AFX) - Loblaw Companies Ltd. (L.TO) Wednesday reported lower profit for the third quarter, as the rise in revenues was offset by higher SG&A expenses. Net earnings declined to C$142 million or C$0.34 per share from C$150 million...
Benzinga  Nov 7  Comment 
The graphs below were produced by Capital Market Labs. Kandi Technologies Group Inc (NASDAQ: KNDI) has booming revenue, collapsing earnings and a huge price-to-sales ratio. In short, when earnings come out, Kandi must show increasing revenue...
SeekingAlpha  Sep 23  Comment 
By Time & Model: Imagine you were told the following information: A retailer has a SG&A run rate of $197 million The retailer's peak "gross profit" in the last five years was $208 million As you know, SG&A is subtracted from gross...
SeekingAlpha  Sep 10  Comment 
By Josh Arnold: Earlier this week I took a look at SeaWorld's (NYSE:SEAS) revenue and margin trends for the past few years. I concluded that SEAS is well positioned to see top and bottom line growth as it has been able to effectively raise prices...
SeekingAlpha  Sep 5  Comment 
By Celan Bryant: Let's get right down to it. Revenues are up at Mobile Mini (NASDAQ:MINI) -- that's the good news. See below for an overview of Q2 highlights. (click to enlarge) Source: Mobile Mini, Q2 Quarterly Presentation Revenue As...
SeekingAlpha  Sep 2  Comment 
By Chronic Bull: Sanofi (NYSE:SNY) had a decent second quarter. The company's sales remained stable at $10.65 billion, compared with $10.56 billion quarter-over-quarter. However, the company improved its operational efficiency and lowered its SG&A...
SeekingAlpha  Jul 14  Comment 
By Corey Sommers: There aren't a lot of levers left for J.C. Penney (NYSE:JCP) to pull in the short term that might meaningfully move the company's stock price higher. SG&A has been cut about as much as it can and is holding steady at around $1B...
Benzinga  Jun 19  Comment 
In a report published Thursday, D.A. Davidson & Co. analyst Andrew Burns reiterated a Neutral rating and $82.00 price target on Nike (NYSE: NKE). In the report, D.A. Davidson & Co. noted, “Our F4Q revenue and EPS estimates are $7.350 billion...




 
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Selling, General & Administrative Expenses is the sum of all selling expenses and all general and administrative expenses

Selling, General & Administrative Expenses (alternately SG&A) is an income statement item that refers to a company's operating expenses outside of cost of sales.

Items commonly included in SG&A are not directly attributable to production. Examples of SG&A include employee salaries, commission bonuses, pension costs, marketing costs, insurance, rent and utilities, and maintenance.

While cost of sales are easily controlled, SG&A expenses are more difficult to manipulate. A company can keep its cost of sales down by limiting raw material purchase and adjusting its manufacture/service-production during a given accounting period. SG&A expenses are oftentimes fixed recurring expenses, and thus not as easily adjustable (i.e. payroll expense).

Investors look to SG&A as a measure of how efficiently a company is using its money. A company maintaining an SG&A that is a high percentage of revenue relative to other companies in its sub-industry would may indicate an inability to adapt to market downturns, as SG&A expenses are not easily changed in a short period of time (money being tied up in things like salary and office rent).

Unless a company is very research and development focused, SG&A expenses tend to be one of the largest of a company's operating expenses.

Example

  • Company XYZ, a widget maker, reports net income of $2 million dollars with a $800 thousand cost of goods sold for a gross profit of $1.2 million. The company spends $200 thousand on research and development and $600 thousand on SG&A expenses. SG&A, then, is 30% of XYZ's total revenues (600 thousand / 2 million) and
  • Company ABC, also in the widget industry, the same year reports net income of $5 million dollars with a $1.5 million cost of goods sold for a gross profit of $3.5 million. The company spends $500 thousand on research and development and $2 million on SG&A expenses. SG&A, then, is 40% of ABC's total revenues (2 million / 5 million).
  • Despite XYZ's relatively higher cost of goods sold (40% of revenue vs 30%), all other things being equal an investor would likely view XYZ better suited to deal with a market downturn or other unforeseen negative stressor on the market, as it's relatively lower SG&A expenses equate to an easier reduction of total expenses should it be necessary, as it is harder for company to reduce SG&A expenses than others.
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