Question

Cost of Goods Sold is Rs. 1,50,000, Operating expenses are Rs. 60,000. Sales is Rs. 2,60,000 and Sales Return is 10,000. Calculate Operating Ratio.

Answer 1

Operating Ratio $=\frac{\left(\text{Cost of Goods Sold + Operating Expenses}\right)}{\text{Net Sales}}\times 100$
Net Sales = Sales – Sales Return
= Rs. 2,60,000 – Rs. 10,000 = Rs. 2,50,000

Operating Ratio $=\frac{(Rs.1,50,000+Rs.60,000)}{Rs.2,50,000}\times 100$
$=\frac{Rs.2,10,000}{Rs.2,50,000}\times 100=84\%$