Question

Calculate Operating Profit Ratio from the Following:

	₹
Revenue from Operations (Net Sales)	5,00,000
Cost of Revenue from Operations (Cost of Goods Sold)	2,00,000
Wages	1,00,000
Office and Administrative Expenses	50,000
Interest on Borrowings	5,000

Answer 1

Cost of Goods Sold = 2,00,000
Operating Expenses = Office and Administrative Expenses = 50,000
Operating Cost = Cost of Goods Sold + Operating Expenses
= 2,00,000 + 50,000 = 2,50,000
Net Sales = 5,00,000

Operating Ratio = `"Operating Cost"/"Net Sales" xx 100`

`= 250000/500000 xx 100 = 50%`

Operating Profit Ratio = 100 – Operating Ratio = 100 – 50 = 50%