Purchases Rs. 7,20,000; Office expenses Rs. 30,000; Selling expenses Rs. 90,000; Opening inventory Rs. 1,40,000; Closing inventory Rs. 80,000; Revenue from operations Rs. 12,00,000. Calculate Operating Ratio
Question
Purchases Rs. 7,20,000; Office expenses Rs. 30,000; Selling expenses Rs. 90,000; Opening inventory Rs. 1,40,000; Closing inventory Rs. 80,000; Revenue from operations Rs. 12,00,000. Calculate Operating Ratio
Solution 1
To calculate the Operating Ratio, we need to follow these steps:
Step 1: Calculate the Cost of Goods Sold (COGS) COGS = Opening Inventory + Purchases - Closing Inventory COGS = Rs. 1,40,000 + Rs. 7,20,000 - Rs. 80,000 COGS = Rs. 7,80,000
Step 2: Calculate the Operating Expenses Operating Expenses = Office Expenses + Selling Expenses Operating Expenses = Rs. 30,000 + Rs. 90,000 Operating Expenses = Rs. 1,20,000
Step 3: Calculate the Operating Ratio Operating Ratio = (Operating Expenses / Revenue from Operations) * 100 Operating Ratio = (Rs. 1,20,000 / Rs. 12,00,000) * 100 Operating Ratio = 10%
Therefore, the Operating Ratio is 10%.
Solution 2
To calculate the Operating Ratio, we need to follow these steps:
Step 1: Calculate the Cost of Goods Sold (COGS) COGS = Opening Inventory + Purchases - Closing Inventory COGS = Rs. 1,40,000 + Rs. 7,20,000 - Rs. 80,000 COGS = Rs. 7,80,000
Step 2: Calculate the Operating Expenses Operating Expenses = Office Expenses + Selling Expenses Operating Expenses = Rs. 30,000 + Rs. 90,000 Operating Expenses = Rs. 1,20,000
Step 3: Calculate the Operating Ratio Operating Ratio = (Operating Expenses / Revenue from Operations) * 100 Operating Ratio = (Rs. 1,20,000 / Rs. 12,00,000) * 100 Operating Ratio = 10%
Therefore, the Operating Ratio is 10%.
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