Sizzle sells product. No wonder the sizzle of ever-lower operating ratios is leading to remarkably higher railroad share prices. But as operating ratios-operating expenses as a percentage of operating revenue-flirt with a sub-60%, the meaning for the longer term is unclear. While operating ratio is the most commonly used performance metric, it is not the Holy grail. Equal to operating ratio as a performance measurement are earnings before interest, taxes, depreciation and amortization (EBITDA), and return on invested capital (ROIC).
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