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 %