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Question
Calculate Operating Profit Ratio from the following information:
| Opening Inventory | ₹ 1,00,000 | Closing Inventory | ₹1,50,000 |
| Purchases | ₹ 10,00,000 | Loss by fire | ₹ 20,000 |
| Revenue from Operations, i.e., Net Sales | ₹ 14,70,000 | Dividend Received | ₹ 30,000 |
| Administrative and Selling Expenses | ₹ 1,70,000 |
Sum
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Solution
Cost of Goods Sold = Opening Inventory + Purchases – Closing Inventory
= 1,00,000 + 10,00,000 – 1,50,000
= 9,50,000
Gross profit = Revenue from operation - Cost of goods sold
= 14,70,000 – 9,50,000
= 5,20,000
Operating profit = Gross profit - Administrative and selling expenses
= 5,20,000 – 1,70,000
= 3,50,000
Operating profit ratio = `("Operating profit")/("Revenue from operations") xx 100`
= `(3,50,000)/(14,70,000) xx 100`
= 23.81%
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