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
Calculate the operating profit ratio of the company.
Answer & explanation
Correct answer: option 2
The correct answer is option 2- 15%.
Operating Profit Ratio = Operating Profit/ Revenue from Operations × 100
= (1,50,000/10,00,000) X100
= 15%
Operating Profit = Revenue from Operations – Operating Cost
= 10,00,000 - 8,50,000
= ₹1,50,000