Question

Calculate Operating Profit Ratio from the following information:

Opening Inventory	₹1,00,000		Closing Inventory	₹1,50,000
Purchases	₹ 10,00,000		Loss by fire	₹ 20,000
Revenue from Operations, i.e., Net Sales	₹ 14,70,000		Dividend Received	₹ 30,000
Administrative and Selling Expenses	₹ 1,70,000

Answer 1

Cost of Goods Sold = Opening Inventory + Purchases – Closing Inventory
= 1,00,000 + 10,00,000 – 1,50,000 = 9,50,000
Operating Expenses = Administrative and Selling Expenses = 1,70,000
Operating Cost = Cost of Goods Sold + Operating Expenses
= 9,50,000 + 1,70,000 = 11,20,000
Net Sales = 14,70,000

Operating Profit Ratio = 100 – Operating Ratio = 100 – 76.19 = 23.81%