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 × 100. Selling and administrative expenses are operating expenses.
Operating cost = ₹1,20,000 + ₹80,000 + ₹40,000 = ₹2,40,000
Operating Ratio = ₹2,40,000 ÷ ₹3,40,000 × 100
= 70.59%
64.71% is the gross profit ratio of the same figures, not the operating ratio.
NCERT (2026-27 edition):
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