Purchases Rs 7 20 000 Office Expenses Rs 30 000 Selling Expenses Rs 90 000 Opening Inventory Rs 1 40...........

General Accounting Principles Ratio analysis

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

60%

75%

70%

65%

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Explanation:

GIVEN: 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

Cost of revenue from operations= opening inventory + purchases - closing inventory

= Rs.1,40,000 + Rs. 7,20,000 - Rs.80,000

= Rs. 7,80,000

operating expenses = office expenses + selling expenses

= Rs. 30,000 + Rs. 90,000

= Rs, 1,20,000

operating ratio = cost of revenue from operation + operating expenses * 100

revenue from operations

= Rs. 7,80,000 + Rs, 1,20,000 * 100

Rs.12,00,000

= Rs. 9,00,000 * 100

Rs. 12,00,000