Operating Ratio:

The operating ratio is a financial metric that measures the efficiency and profitability of a company's operations. It is calculated by dividing the operating expenses of a company by its net sales. The operating expenses include costs such as salaries, rent, utilities, and depreciation.

The formula for calculating the operating ratio is as follows:
Operating Ratio = (Operating Expenses / Net Sales) x 100

Understanding the Operating Ratio:

The operating ratio provides insight into how well a company is managing its costs and generating profits from its core business activities. A lower operating ratio indicates that a company is more efficient in controlling its expenses and generating higher profits.

On the other hand, a higher operating ratio suggests that a company is facing challenges in managing its costs and may have lower profitability.

Calculating the Operating Profit Ratio:

The operating profit ratio is a related metric that measures the profitability of a company's operations. It is calculated by subtracting the operating expenses from the net sales and then dividing the result by the net sales.

The formula for calculating the operating profit ratio is as follows:
Operating Profit Ratio = [(Net Sales - Operating Expenses) / Net Sales] x 100

Relationship between Operating Ratio and Operating Profit Ratio:

The operating profit ratio can be derived from the operating ratio by subtracting it from 100. This is because the operating ratio represents the percentage of operating expenses in relation to net sales, while the operating profit ratio represents the percentage of operating profit in relation to net sales.

Calculating the Operating Profit Ratio with the Given Operating Ratio:

If the operating ratio of a company is 24%, we can calculate the operating profit ratio as follows:
Operating Profit Ratio = (100 - Operating Ratio)
Operating Profit Ratio = (100 - 24)
Operating Profit Ratio = 76%

Conclusion:

In summary, the operating ratio measures the efficiency and profitability of a company's operations, while the operating profit ratio specifically focuses on the profitability aspect. By subtracting the operating ratio from 100, we can calculate the operating profit ratio. In the given scenario, if the operating ratio is 24%, the operating profit ratio would be 76%.