What is the Service Quotient defined as?

• A. Service Revenue divided by Service Cost
• B. Service Cost divided by Service Revenue
• C. Net Income divided by Revenue
• D. Revenue divided by Total Assets

Answer: (A)

Service Quotient shows how much service revenue you generate for each dollar of cost spent on delivering the service. It answers: for every dollar invested in providing the service, how much revenue comes in? So a value of 2 means $2 of revenue for every $1 spent on service costs, indicating efficient service delivery.

The other options don’t fit because they flip the relationship or mix in different concepts: cost divided by revenue would tell you cost per dollar of revenue, not revenue per cost; net income divided by revenue is a general profit margin that includes all expenses, not just service costs; revenue divided by total assets is an asset turnover measure for the whole business, not specific to service costs.