Question

From the following information, calculate Operating Ratio:

Cost of Revenue			Revenue from Operation:
from Operations (Cost of Goods Sold)	₹52,000		Gross Sales	₹ 88,000
Operating Expenses	₹18,000		Sales Return	₹ 8,000

Answer 1

Net Sales = Gross Sales - Sales Return

= 88000 - 8000 = Rs 80000

Operating Cost = Cost of Goods Sold + Operating Expenses 

= 52,000 + 18,000 = Rs 70,000 

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

`= 70000/80000 xx 100 = 87.5%`