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From the following information, calculate operating profit ratio and operating ratio.

ParticularsRsParticularsRs
Sales Less Returns4,00,000Selling Expenses25,000
Gross Profit1,40,000Income From Investment1,000
Administration Expenses35,000Loss On Account Of Fire2,000

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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%

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