Question

What will be the Operating Ratio of Zenia Ltd. from the particulars given below?

Revenue from Operations	₹ 9,00,000
Gross Profit	20% on cost
Operating Expenses	₹ 60,000

Options

• 86.67%

• 90%

• 76.67%

• 20%

Answer 1

90%

Explanation:

Let the Cost of Revenue from Operations be x.

Revenue from Operations = Gross Profit + Cost of Revenue from Operations

9,00,000 = `20/100 x + x`

9,00,000 = `120/100 x`

`x` = `(9,00,000 xx 100)/120`

Cost of Revenue from Operations `(x)` = ₹ 7,50,000

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

= `(7,50,000 + 60,000)/(9,00,000) xx 100`

= `(8,10,000)/(9,00,000) xx 100`

= 90%