Reading a Company R&D Ratio
What to look at
| Measure | What it suggests |
|---|---|
| R&D as a share of revenue | Commitment to new products |
| Capitalisation policy | How much is expensed versus deferred |
| Headcount mix | Engineers versus sales, by period |
| Patent activity | Output, not just spend |
| Product cadence | Whether spending reaches the market |
Practical cautions
- A high ratio in a low-revenue company can simply mean low sales.
- Compare within the same sector and business model.
- Read the notes; the accounting policy changes the picture.
This section summarises public information and is not investment advice.