Read the following passage and answer the question.

Sagar Ltd. was suggested to analyze their performance to take corrective action at the right time to arrest the fall in profits and also for maintaining operational efficiency. The Following information is given-

Operating Cost = ₹8,50,000
Gross Profit Ratio = 20%
Operating Expenses = ₹50,000

What will be the operating profit of the company?

₹1,50,000

The correct answer is option 4- ₹1,50,000.

Cost of Revenue from operations = Operating cost - Operating expenses
                                                     = 8,50,000 - 50,000
                                                     = ₹8,00,000

Revenue from operations = Gross profit + Cost of revenue from operations
Let us assume revenue from operations is x, So gross profit is (20x/100)
                                      ={ x - (20x/100)} = 8,00,000
                                      = 80x = 8,00,00,000
                                      = x= ₹10,00,000
Revenue from operations is ₹10,00,000.

Operating Profit = Revenue from Operations – Operating Cost
                           = 10,00,000 - 8,50,000
                           = ₹1,50,000