Practicing Success

Target Exam

CUET

Subject

Accountancy

Chapter

Accounting Ratios

Question:

What is the difference between operating ratio and operating profit ratio?

Options:

Operating Profit Ratio = 100 + Operating Ratio

Operating Profit Ratio = 100 – Operating Ratio

Operating Profit Ratio = 100 – 10% of Operating Ratio

None of these

Correct Answer:

Operating Profit Ratio = 100 – Operating Ratio

Explanation:

The correct answer is option 2 i.e. Operating Profit Ratio = 100 – Operating Ratio.

Operating Profit Ratio : It is calculated to reveal operating margin. It may be computed directly or as a residual of operating ratio.
Operating Profit Ratio = 100 – Operating Ratio.