Q.From the illustrative Statement of Profit and Loss in Section 1 (Revenue from Operations ₹20,00,000; Gross Profit ₹6,00,000; Cost of Revenue from Operations ₹14,00,000; Operating Expenses ₹2,00,000; Operating Profit ₹4,00,000), calculate the Gross Profit Ratio, the Operating Ratio, and the Operating Profit Ratio.
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Start your 14-day free trial to unlock the full solution →Step 1 — Gross Profit Ratio.
Gross Profit Ratio = (Gross Profit ÷ Revenue from Operations) × 100 = (6,00,000 ÷ 20,00,000) × 100 = 30%.
Step 2 — Operating Ratio.
Total Operating Cost = Cost of Revenue from Operations + Operating Expenses = 14,00,000 + 2,00,000 = ₹16,00,000.
Operating Ratio = (Total Operating Cost ÷ Revenue from Operations) × 100 = (16,00,000 ÷ 20,00,000) × 100 = 80%.
Step 3 — Operating Profit Ratio.
Operating Profit Ratio = (Operating Profit ÷ Revenue from Operations) × 100 = (4,00,000 ÷ 20,00,000) × 100 = 20%.
Check: Operating Ratio + Operating Profit Ratio = 80% + 20% = 100% ✓ — confirming that between them, operating costs and operating profit exactly account for all of Revenue from Operations, as they must. …
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