Question
From the following information, calculate Operating Ratio:
✓
Answer
Operating Ratio $=\frac{\text{Cost of Revenue from Operations + Operating Expenses}}{\text{Revenue from Operations}}$
Revenue from ₹ 4,00,000 + ₹ 3,00,000 = ₹ 1,00,000
Cost of Revenue from Oprations $=₹\ 7,00,000\times\frac{100}{140}=₹\ 5,00,000$
Operating Expenses = Administrative Expenses + Selling and Distribution Expenses
= ₹ 60,000 + ₹ 42,000 = ₹ 1,02,000
Operating Ratio $=\frac{₹\ 5,00,000+1,02,000}{7,00,000}=86\%$
Revenue from ₹ 4,00,000 + ₹ 3,00,000 = ₹ 1,00,000
Cost of Revenue from Oprations $=₹\ 7,00,000\times\frac{100}{140}=₹\ 5,00,000$
Operating Expenses = Administrative Expenses + Selling and Distribution Expenses
= ₹ 60,000 + ₹ 42,000 = ₹ 1,02,000
Operating Ratio $=\frac{₹\ 5,00,000+1,02,000}{7,00,000}=86\%$
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