What term describes the division of total operating expenses by total revenue for a water utility?

The term that describes the division of total operating expenses by total revenue for a water utility is known as the operating ratio. This ratio is a key financial measure used to assess the efficiency of a water utility in managing its operational costs relative to its generated revenue.

A lower operating ratio indicates that a utility is able to operate more efficiently, spending less on operating expenses for each dollar of revenue earned. Conversely, a higher operating ratio suggests that a significant portion of revenue is consumed by operating expenses, which could point to inefficiencies or higher costs in providing services.

Understanding the operating ratio helps water utilities evaluate their financial health and operational efficiency, aiding in decision-making processes related to budgeting and resource allocation. This focus on operational efficiency is crucial for maintaining sustainable water services, especially for very small water systems that may operate with limited resources.