Question

Y Ltd. is facing a problem of high operating ratio of 81.82%. The directors of the company want you to suggest any two remedial measures to be taken, so as to bring down this ratio up to a satisfying level.

Answer 1

A high operating ratio of 81.82% shows that most of the revenue is being spent on operating costs, leaving little for profit. To reduce this ratio, Y Ltd. can take these remedial measures:

1. Lower the price of goods sold by cutting down on things like selling and management costs.
2. Sell more of those kinds of things that can help you make more money.