SG&A (Selling, General & Administrative Expenses)
The combined costs of selling products and running the back-office, including salaries, marketing, rent, and executive compensation.
What is SG&A?
Selling, General and Administrative expenses (SG&A) is a line item on the income statement that groups together all costs of running the business that are not directly tied to producing goods or services. Selling expenses include sales staff salaries, marketing, advertising, and commissions. General and administrative expenses (G&A) cover corporate overhead: executive salaries, legal fees, rent for non-production facilities, accounting, IT, and human resources. SG&A is one of the main levers of operating leverage — a company that can grow revenue while keeping SG&A flat or growing more slowly will see significant margin expansion. Analysts express SG&A as a percentage of revenue to track efficiency trends over time.
Example
Salesforce targets an SG&A ratio below 20% of revenue as part of its transition to a more profitable growth model. In FY2024, it reduced SG&A as a percentage of revenue from 35% to 22% — a major driver of its significant operating margin expansion that year.
Source: Investopedia — SG&A