Higher the ratio, the more favorable it is, doesn't stand true for ___________.

Operating ratio

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Liquidity ratio

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Net profit ratio

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Stock turnover ratio

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Solution

The correct option is B Operating ratio
Operating ratio is a company's operating expenses as a percentage of revenue. Higher the operating ratio the less favorable it is because, it would leave a smaller margin to meet interest, dividend and other corporate needs. This ratio is calculated mainly to ascertain operational efficiency of the management in their business operations.

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