From the following information, calculate operating ratio.
* Revenue from operations ₹3,40,000
* Cost of revenue from operations ₹1,20,000
* Selling expenses ₹80,000
* Administrative expenses ₹40,000
Answer & explanation
Correct answer: option 2
The correct answer is option 2- 70.59%.
Operating ratio = (Cost of Revenue from operations + operating expenses)/ Revenue from operations x 100
= (1,20,000 + 1,20,000)/3,40,000 x 100
= 2,40,000/3,40,000 x 100
= 70.58%
*Operating expenses include both selling and administrative expenses.