How to Find the Total Expense Ratio on a Balance Sheet

The total expense ratio is a ratio that is used to describe the management costs associated with an investment fund. This ratio is important to calculate as it will help investors and the fund's managers to determine if the fund is being properly managed or if it is out of balance. To calculate the total expense ratio, or TER, you will need to divide the total fund costs by the total fund assets. Fortunately, both of these figures can be derived from the investment fund's balance sheet.

Things You'll Need

• Balance sheet Calculator

Instructions

1. Obtain a copy of the investment fund's balance sheet. This can usually be obtained from the fund's manager, the company website or via your stock broker.

2. Mine the "assets" section of the balance sheet for the assets held by the investment fund. Investment fund assets are going to include things like domestic stocks and bonds and foreign stocks.

3. Look under liabilities to find entries that will help you to calculate the total fund costs. You will want to look for costs such as trading fees, management fees, legal fees, accounting fees, auditing fees and overhead expenses.

4. Calculate the Total Expense Ratio. To find the TER all you have to do is use your calculator to divide the figure you came up with in step three by the figure you came up with in step two.

Tips & Warnings

• To ensure you have all the expense related to the management of your investment fund and all of the funds assets, you may also want to refer to the fund's cash flow statement and a detailed expense report.