Concentration Ratio Calculator

Calculate Concentration Ratio







Formula

The formula to calculate the Concentration Ratio is:

\[ 4CR = MS1 + MS2 + MS3 + MS4 \]

Where:

What is Concentration Ratio?

In finance, a concentration ratio is a measure of the total market share that is owned by the top four firms in a sector or industry. It is used to understand and analyze the total competition in an industry. For example, if the top 4 firms hold 90% of the industry in terms of sales, then there is very little competition in the industry. If the top 4 firms hold 10%, there is a lot of competition.

Example Calculation

Let's assume the following market shares:

Using the formula to calculate the concentration ratio:

\[ 4CR = 25 + 20 + 15 + 10 = 70 \% \]

The concentration ratio is 70%.