Question
Calculate operating ratio from the following:
✓
Answer
Operating Ratio $=\frac{\text{Cost of Revenue from Operations + Operating Expenses}}{\text{Net Revenue from Operations}}\times100$
Cost of Revenue from Operations = Net Revenue from Operations - Gross Profit
= ₹ 12,00,000 - ₹ 3,00,000 = ₹ 9,00,000
Operating Expenses = Office Expenses + Selling Expenses
= ₹ 80,000 + ₹ 40,000 = ₹ 1,20,000
Hence, Operating Ratio $=\frac{₹\ 9,00,000+₹\ 1,20,000}{₹\ 12,00,000}=85\%$
Cost of Revenue from Operations = Net Revenue from Operations - Gross Profit
= ₹ 12,00,000 - ₹ 3,00,000 = ₹ 9,00,000
Operating Expenses = Office Expenses + Selling Expenses
= ₹ 80,000 + ₹ 40,000 = ₹ 1,20,000
Hence, Operating Ratio $=\frac{₹\ 9,00,000+₹\ 1,20,000}{₹\ 12,00,000}=85\%$
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