Based on following data related to Ambe limited, Jaipur, Answer question.

Identity the ratio that is computed to analyse cost of operation in relation to revenue from operations.

Operating Ratio

The correct answer is Option 1 - Operating Ratio.

Operating ratio is computed to analyse cost of operation in relation to revenue from operations. It is calculated as follows: Operating Ratio = (Cost of Revenue from Operations + Operating Expenses)/ Net Revenue from Operations ×100.

Operating expenses include office expenses, administrative expenses, selling expenses, distribution expenses, depreciation and employee benefit expenses etc.
Cost of operation is determined by excluding non-operating incomes and expenses such as loss on sale of assets, interest paid, dividend received, loss by fire, speculation gain and so on.