Question

Calculate operating ratio from the following:

	₹
Net Revenue from Operations	12,00,000
Credit Revenue from Operations	8,00,000
Gross Profit	3,00,000
Depreciation and Amortisation Expenses	80,000
Selling Expenses	40,000
Loss by Fire	20,000

Answer 1

Cost of Revenue from Operations = Net Revenue from Operations − Gross Profit

= ₹ 12,00,000 − ₹ 3,00,000

= ₹ 9,00,000

Operating Expenses = Depreciation and Amortisation Expenses + Selling Expenses

= ₹ 80,000 + ₹ 40,000

= ₹ 1,20,000

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

Operating Ratio = `(₹ 9,00,000  + ₹ 1,20,000)/(₹ 12,00,000) xx 100`

= `(₹ 10,20,000)/(₹ 12,00,000) xx 100`

= 85%