Given the following information:
| Particulars | Amount (₹) |
| Revenue from Operations | 3,40,000 |
| Cost of Revenue from Operations | 1,20,000 |
| Selling expenses | 80,000 |
| Administrative Expenses | 40,000 |
Calculate Operating ratio.
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → 70.59%
Operating ratio compares the cost of running the business (cost of revenue from operations plus operating expenses) with the revenue from operations, and is shown as a percentage.
Operating ratio = (Cost of revenue from operations + Operating expenses) / Net revenue from operations × 100
Operating expenses = Selling expenses + Administrative expenses = Rs. 80,000 + Rs. 40,000 = Rs. 1,20,000
Operating cost = Rs. 1,20,000 + Rs. 1,20,000 = Rs. 2,40,000
Operating ratio = Rs. 2,40,000 / Rs. 3,40,000 × 100
Operating ratio = 70.59%
The answer is a percentage, not “times”, and its first digits are 70.59, not the 70.95 or 50.79 of the look-alike options.
NCERT (2026-27 edition):
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