Fire Your Stock Analyst!: Analyzing Stocks on Your Own

Analyzing Overhead Expenses

Sales, general and administrative (SG&A) is a catch-all category that includes most of a firm’s operating expenses except for cost of sales, research and development, and depreciation and amortization. SG&A expenses are, in effect, overhead.

Sometimes companies list marketing expenses on a separate line from other SG&A expenses on the income statement. Consider all operating expenses except cost of sales, research and development, and depreciation/amortization charges as SG&A for this analysis.

The lower the SG&A, the tighter the ship that management is running. Comparing competitors’ SG&A expenses can give you important insight into each company’s operations. The best way to compare SG&A between companies is to divide ...