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.
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.

15%

Operating Profit Ratio = Operating Profit/ Revenue from Operations × 100
                                      = (150000/1000000) X100
                                      = 15%

Operating Profit = Revenue from Operations – Operating Cost

                           = 1000000 - 850000
                           =₹150000

Revenue from operations= Gross profit - the cost of revenue from operations
Let us assume revenue from operations is x so gross profit is (20x/100)
                                      ={ x - (20x/100)} = 800000
                                      = 80x = 80000000
                                       = x= ₹1000000