Quick Definition
Company expenses resulting to the sale of goods and services, along with management expenses.
Explanation of Sales General and Administration
Also called SG and A, Marketing, General, and Administrative, or simply General and Administrative, and listed on the Income Statement, Sales, General, and Administrative are the expenses related to the sale of the goods or services and also the expenses for management of the company operations. Expenses such as leases and rent, salaries and wages, facility expenses. Occasionally, advertising and marketing expenses toward the products or services are included, but are often listed as a separate line item.
Importance of Sales General and Administration
Sales, General, and Administrative should closely follow Net Sales, and any percent increase or decrease over multiple periods when compared to Net Sales needs to be further investigated.
Further, the amount of SG and A compared to Net Sales should be checked against the industry the company operates within, as too high or too low a ratio may indicate problems. This financial ratio is called Sales to Administrative Expenses.
