Question

Compute Operating Ratio from the following Statement of Profit and Loss of X Ltd. for the year ended 31st March, 2023:

STATEMENT OF PROFIT AND LOSS for the year ended 31st March, 2023
Particulars	Note No.	₹
I. Revenue from Operations (Sales)		24,00,000
II. Add: Other Incomes		20,000
III. Total Income I + II		24,20,000
IV. Less: Expenses
Cost of Materials Consumed		14,10,000
Change in Inventories of Finished Goods and Work in Progress		(30,000)
Employee Benefit Expenses		2,82,000
Finance Costs		20,000
Depreciation and Amortization Expenses		60,000
Other Expenses	1	1,20,000
Total Expenses		18,62,000
V. Profit before Tax (III − IV)		5,58,000

Notes to Accounts:

Particulars	₹
1. Other Expenses:
Office Expenses	54,000
Loss by Fire	50,000
Donations	16,000
	1,20,000

Answer 1

Cost of Revenue from Operations = Cost of Materials Consumed + Change in Inventories of Finished Goods and Work in Progress

= ₹ 14,10,000 − ₹ 30,000

= ₹ 13,80,000

Operating Expenses = Employee Benefit Expenses + Depreciation and Amortization Expenses + Office Expenses

= ₹ 2,82,000 + ₹ 60,000 + ₹ 54,000

= ₹ 3,96,000

Operating Ratio = `"Cost of Revenue from Operations + Operating Expenses"/"Revenue from Operations" xx 100`

= `(₹ 13,80,000  + ₹ 3,96,000)/(₹ 24,00,000) xx 100`

= `(₹ 17,76,000)/(₹ 24,00,000) xx 100`

= 74%