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Glossary

Concentration ratio (CR-n)

The combined revenue share of the n largest customers: CR1, CR5, CR10.

DefinitionThe combined revenue share of the n largest customers: CR1, CR5, CR10.

The concentration ratio adds the shares of the top n customers. It is the form lenders, acquirers and auditors use, and it is blind to how revenue is divided inside the top n: one customer at 41 percent and nine at 1 percent is the same CR10 as ten at 5 percent. CR1 is always reported beside CR10 for that reason.

How it is computed

The revenue shares of the n largest customers added together, usually for n of 1, 5 and 10, from the ledger with subsidiaries rolled up to parents.

Example

The largest customer is 12 percent of revenue, the top five 31 percent and the top ten 40 percent. A year ago they were 9, 27 and 38.

Where it goes wrong

Top ten reported without the largest single share. One customer at 41 percent and nine at 1 percent looks the same as ten at 5 percent.