What is the correct formula for computing Operating Ratio?

(Operating Cost/Revenue from Operations) x 100

The correct answer is option 4- (Operating Cost/Revenue from Operations) x 100.

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 Ratio = (Operating cost/ 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.