The formula to calculate the expense ratio is: Expense Ratio (%) = (Total Operating Expenses / Total Revenue) x 100 For instance, if a company has total operating expenses of $200,000 and total revenue of $1,000,000, the expense ratio would be: Expense Ratio = ($200,000 / $1,000,000) x 100 = 20% This indicates that 20% of the revenue is used to cover operating expenses.