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%.
* Cost of Revenue from Operations = 1,20,000
* Operating Expenses = Selling expenses + Administrative expenses
= 80,000 + 40,000
= 1,20,000
* Net Revenue from Operations = 3,40,000
Operating Ratio = (Cost of Revenue from Operations + Operating Expenses)/ Net Revenue from Operations ×100
= (1,20,000 + 1,20,000)/3,40,000 x 100
= 2,40,000/3,40,000 x 100
= 70.588%
= 70.59%