The Board & the Operating Ratio

Each fiscal year the board judges your railway on a single number every Victorian railway lived and died by: the operating ratio.

operating ratio = running cost ÷ fare income      (lower is better)

It is not profit, and it is not the size of your bank balance. It's a ratio, so it scales with your line automatically — a giant network with proportional costs is judged exactly like a small tidy one. Crucially, construction and shop spending are capital, not running cost — buying track, buildings, carriages or land never hurts your grade. Only upkeep and fuel count against you.

The grade tiers

Each era sets the most cost-to-revenue the board will accept, and it tightens as competition and the cost treadmill bite:

Your grade for the year:

• Beat the target by 0.10 or more → top grade, and the board pays a dividend worth 40% of the era's dividend base.
• Meet the target → met, dividend worth 20% of the base.
• Miss it → nothing.

Dividend bases climb by era (Steam 40 → Grand Expansion 130 → Electric 300 → Modern 550), so a consistently top-grade line is collecting a serious, compounding cash bonus on top of its fares — that's a big part of how the Railway King is crowned around the year 2000 while a coaster never arrives.

One hard rule: a year that earns zero fares but still owes upkeep is an automatic miss. This is exactly why the union strike hurts (see The Long Century & the Strike) — idle trains earn nothing while the upkeep clock keeps ticking.

Why a frozen line slides into a miss

Running cost is built to rise while fares never inflate. Three forces push your costs up:

1. The network you maintain, charged super-linearly — the total upkeep is raised to the 1.15 power, so sprawl is punished disproportionately.
2. The train you run — fuel costs 0.45 per seat every period it runs, so an oversized train on a thin line just burns coal.
3. The era cost multiplier — the announced historic hikes (unionisation ×1.4, nationalisation ×1.7, the oil crisis ×2.0, plus the strike) compound. By the mid-1970s a line is paying roughly ×7 its base upkeep.

Here's a do-nothing line — a working starter that never grows — followed across the century. Watch the ratio go from comfortable to fatal as costs climb against frozen income:

A starter that never grows: income frozen, cost climbing with the era staircase until the line bleeds its whole net worth away.

How to beat the ratio — four levers

The ratio rewards revenue per unit of upkeep. Every one of these raises the numerator (or shrinks the denominator) without you spending a coin of running cost:

1. Build up, not out. Building upkeep is flat across tiers — an Apartment Block (8 residents) costs the exact same 0.7/period to run as a House (2). Replacing a House with an Apartment quadruples its output at zero extra upkeep. This is the single strongest ratio lever in the game.
2. Right-size the train to the crowd. Fuel scales with seats. A long consist on a line that can't fill it is pure denominator. Add carriages only when passengers are actually piling up.
3. Don't sprawl. The 1.15-power network term means every extra cell of track, every extra station (the priciest piece to run at 0.9/period), and every decorative tree (0.15) costs you more than its share. Stay compact.
4. Keep growing revenue. Because the target tightens each era and your costs compound, last decade's winning ratio is next decade's miss. The board is a treadmill; the only stable strategy is a line whose fares keep climbing.

A line that does all four sits comfortably under the target its entire life: an efficient, growing line never misses the ratio after its opening years, while a coasting one slides into a permanent miss the moment the cost staircase climbs.

Next: the engine that actually generates your fares — The Demand Engine.