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Question
Calculate 'Operating Profit Ratio' from the following information:
| Revenue from operations | ₹ 10,00,000 |
| Gross profit | 25% on cost |
| Office and administrative expenses | ₹ 18,000 |
| Selling and distribution expenses | ₹ 2,000 |
| Loss by theft | ₹ 20,000 |
Sum
Solution
Operating Ratio = `"Cost of Revenue from operations + Operating expenses"/"Revenue from operations" xx 100`
Cost of revenue from operation= Revenue from operations − Gross profit
= 10,00,000 − `((10,00,000)/125 xx 25)`
= 10,00,000 − 2,00,000
= 8,00,000
Operating expenses = Office and Administrative expenses + Selling and Distribution expenses
= 18,000 + 2,000
= 20,000
Thus, Operating ratio = `(8,00,000 + 20,000)/(10,00,000) xx 100`
= 82%
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