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Question
Purchases ₹ 7,20,000; Office Expenses ₹ 30,000; Selling Expenses ₹ 90,000; Opening Inventory ₹ 1,40,000; Closing Inventory ₹ 80,000; Revenue from Operations ₹ 12,00,000. Calculate Operating Ratio.
Options
60%
75%
70%
65%
MCQ
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Solution
75%
Explanation:
Cost of Revenue from Operations = Opening Inventory + Purchases − Closing Inventory
= 1,40,000 + 7,20,000 − 80,000
= ₹ 7,80,000
Operating Expenses = Office Expenses + Selling Expenses
= 30,000 + 90,000
= ₹ 1,20,000
Operating Ratio = `("Cost of Revenue from Operations" + "Operating Expenses")/"Revenue from Operations" xx 100`
= `(7,80,000 + 1,20,000)/(12,00,000) xx 100`
= `(9,00,000)/(12,00,000) xx 100`
= 75%
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