Question

Calculate operating profit ratio under the following cases.

Case 1: Revenue from operations ₹ 8,00,000, Operating profit ₹ 2,00,000.

Case 2: Revenue from operations ₹ 20,00,000, Operating cost ₹ 14,00,000.

Case 3: Revenue from operations ₹ 10,00,000, Gross profit 25% on revenue from operations, Operating expenses ₹ 1,00,000.

Answer 1

Operating profit ratio = `"Operating Profit"/"Revenue from operation" xx 100`

Case 1:

Operating profit ratio = `200000/800000 xx 100` = 25%

Case 2:

Operating profit = Revenue from operation - Operating Cost

Operating profit ratio = 20,00,000 - 14,00,000 = Rs. 6,00,000

Operating profit ratio = `600000/2000000 xx 100` = 30%

Case 3:

Gross profit = `10,00,000 xx 25/100` = Rs. 2,50,000

Operating profit = Gross profit - Operating expenses

= 2,50,000 - 1,00,000

= Rs. 1,50,000

Operating profit ratio = `150000/1000000 xx 100` = 15%