Practical Problem 16

Calculate Operating Ratio

Cost of good sold

₹ 3,50,000

Operating Exp.

₹ 30,000

Sales

₹ 5,00,000

Sales Return

₹ 30,000

SOLUTION:

Net sales = Sales – Sales return

                = 5,00,000 – 30,000

                = ₹ 4,70,000

∴ Operating Ratio = (Cost of Goods Sold + Operating Expense)/(Net Sales) x 100 

∴ Operating Ratio = (3,50,000 + 30,000)/4,70,000 x 100

∴ Operating Ratio = 3,80,000/4,70,000 x 100

∴ Operating Ratio = 80.85 %