From the following information, calculate operating profit ratio and o

1.	From the following information, calculate operating profit ratio and operating ratio.ParticularsRsParticularsRsSales Less Returns4,00,000Selling Expenses25,000Gross Profit1,40,000Income From Investment1,000Administration Expenses35,000Loss On Account Of Fire2,000
Answer» Operating Profit = Gross Profit - Administration And Selling Expenses = 1,40,000 - (35,000 + 25,000) = 1,40,000 - 60,000 = Rs. 80,000 Operating Profit Ratio = (80, 000 / 4,00,000) × 100 = 20 % Operating Ratio = (Cost Of Goods Sold + Operating Expenses) / Net Sales = [{(Net Sales–Gross Profit) + (Administration Expenses+Selling Expenses)}/ Net Sales] X 100 = [{(4,00,000 – 1,40,000) + (35,000 + 25,000)} / 4,00,000] x 100 = 80% The same can be alternatively be calculated as follows: =100 – Operating Profit Ratio = 100 – 20 = 80%

From the following information, calculate operating profit ratio and operating ratio.ParticularsRsParticularsRsSales Less Returns4,00,000Selling Expenses25,000Gross Profit1,40,000Income From Investment1,000Administration Expenses35,000Loss On Account Of Fire2,000

Answer»

Operating Profit = Gross Profit - Administration And Selling Expenses

= 1,40,000 - (35,000 + 25,000)

= 1,40,000 - 60,000

= Rs. 80,000

Operating Profit Ratio = (80, 000 / 4,00,000) × 100

= 20 %

Operating Ratio = (Cost Of Goods Sold + Operating Expenses) / Net Sales

= [{(Net Sales–Gross Profit) + (Administration Expenses+Selling Expenses)}/ Net Sales] X 100

= [{(4,00,000 – 1,40,000) + (35,000 + 25,000)} / 4,00,000] x 100

= 80%

The same can be alternatively be calculated as follows:

=100 – Operating Profit Ratio

= 100 – 20

= 80%