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On the basis of the given information, calculate operating ratio:- Cash revenue from operations:4,00,000; Credit revenue from operations:2,00,000; Cost of revenue from operations:3,90,000; Depreciation:3,000; Employees' benefit expenses:27,000; Purchase of stock-in-trade:40,000?
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On the basis of the given information, calculate operating ratio:- Cas...
Calculation of Operating Ratio
Explanation
Operating Ratio is a financial ratio that is used to measure the efficiency of a company's operations. It is calculated by dividing the total operating expenses of a company by its total revenue from operations. The operating ratio is expressed as a percentage, and the lower the percentage, the more efficient the company's operations are.
In the given problem, the cash revenue from operations is 4,00,000, and the credit revenue from operations is 2,00,000. Therefore, the total revenue from operations is 6,00,000. The cost of revenue from operations is 3,90,000, and other expenses such as depreciation, employees' benefit expenses, and purchase of stock-in-trade are 3,000, 27,000, and 40,000, respectively. Therefore, the total expenses are 4,60,000.
To calculate the operating ratio, we divide the total expenses by the total revenue from operations and then multiply the result by 100. In this case, the operating ratio is 76.67%. It means that the company spends 76.67% of its revenue from operations on its operating expenses. A lower operating ratio indicates that the company is more efficient in managing its operating expenses.
- Cash revenue from operations: 4,00,000
- Credit revenue from operations: 2,00,000
- Total revenue from operations: 6,00,000 (4,00,000+2,00,000)
- Cost of revenue from operations: 3,90,000
- Depreciation: 3,000
- Employees' benefit expenses: 27,000
- Purchase of stock-in-trade: 40,000
- Total expenses: 4,60,000 (3,90,000+3,000+27,000+40,000)
- Operating Ratio = (Total expenses/Total revenue from operations) x 100
- Operating Ratio = (4,60,000/6,00,000) x 100
- Operating Ratio = 76.67%
Explanation
Operating Ratio is a financial ratio that is used to measure the efficiency of a company's operations. It is calculated by dividing the total operating expenses of a company by its total revenue from operations. The operating ratio is expressed as a percentage, and the lower the percentage, the more efficient the company's operations are.
In the given problem, the cash revenue from operations is 4,00,000, and the credit revenue from operations is 2,00,000. Therefore, the total revenue from operations is 6,00,000. The cost of revenue from operations is 3,90,000, and other expenses such as depreciation, employees' benefit expenses, and purchase of stock-in-trade are 3,000, 27,000, and 40,000, respectively. Therefore, the total expenses are 4,60,000.
To calculate the operating ratio, we divide the total expenses by the total revenue from operations and then multiply the result by 100. In this case, the operating ratio is 76.67%. It means that the company spends 76.67% of its revenue from operations on its operating expenses. A lower operating ratio indicates that the company is more efficient in managing its operating expenses.
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On the basis of the given information, calculate operating ratio:- Cash revenue from operations:4,00,000; Credit revenue from operations:2,00,000; Cost of revenue from operations:3,90,000; Depreciation:3,000; Employees' benefit expenses:27,000; Purchase of stock-in-trade:40,000?
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On the basis of the given information, calculate operating ratio:- Cash revenue from operations:4,00,000; Credit revenue from operations:2,00,000; Cost of revenue from operations:3,90,000; Depreciation:3,000; Employees' benefit expenses:27,000; Purchase of stock-in-trade:40,000? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about On the basis of the given information, calculate operating ratio:- Cash revenue from operations:4,00,000; Credit revenue from operations:2,00,000; Cost of revenue from operations:3,90,000; Depreciation:3,000; Employees' benefit expenses:27,000; Purchase of stock-in-trade:40,000? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for On the basis of the given information, calculate operating ratio:- Cash revenue from operations:4,00,000; Credit revenue from operations:2,00,000; Cost of revenue from operations:3,90,000; Depreciation:3,000; Employees' benefit expenses:27,000; Purchase of stock-in-trade:40,000?.
On the basis of the given information, calculate operating ratio:- Cash revenue from operations:4,00,000; Credit revenue from operations:2,00,000; Cost of revenue from operations:3,90,000; Depreciation:3,000; Employees' benefit expenses:27,000; Purchase of stock-in-trade:40,000? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about On the basis of the given information, calculate operating ratio:- Cash revenue from operations:4,00,000; Credit revenue from operations:2,00,000; Cost of revenue from operations:3,90,000; Depreciation:3,000; Employees' benefit expenses:27,000; Purchase of stock-in-trade:40,000? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for On the basis of the given information, calculate operating ratio:- Cash revenue from operations:4,00,000; Credit revenue from operations:2,00,000; Cost of revenue from operations:3,90,000; Depreciation:3,000; Employees' benefit expenses:27,000; Purchase of stock-in-trade:40,000?.
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