## Calculate Operating Profit Ratio, in each of the following alternative cases: Case 1:  Revenue from Operations (Net Sales) Rs. 10,00,000; Operating Profit Rs. 1,50,000. Case 2:  Revenue from Operations (Net Sales) Rs. 6,00,000; Operating Cost Rs. 5,10,000. Case 4:  Revenue from Operations (Net Sales) Rs. 3,60,000; Gross Profit 20% on Sales; Operating Expenses Rs. 18,000. Case 4: Revenue from Operations (Net Sales) Rs. 4,50,000; Cost of Revenue from Operations Rs. 3,60,000; Operating Expenses Rs. 22,500. Case 5: Cost of Goods Sold, i.e., Cost of Revenue from Operations Rs. 8,00,000; Gross Profit 20% on Sales; Operating Expenses Rs. 50,000.

SOLUTION

Case 1 :

Operating Ratio = Operating Cost /  Net Sales ×100
= 1,50,000 / 10,00,000 × 100
= 15%

Case II :

Operating Profit = Net Sales – Operating Cost
= 6,00,000 – 5,10,000
= 90,000

Operating Ratio = Operating Cost /  Net Sales ×100
= 90,000 / 6,00,000 × 100
=15%

Case III :

Net Sales = 3,60,000
Gross Profit = 20% on Sales
Gross Profit = 20 / 100 × 3,60,000
= 72,000

Operating Profit = Net Sales – Operating Cost
= 72,000 – 18,000
= 54,000

Operating Ratio = Operating Cost /  Net Sales ×100
= 54,000 / 3,60,000 × 100
= 15%

Case IV:

Net Sales = 4,50,000
Operating Profit = Net Sales – Cost of goods sold – Operation expenses
= 4,50,000 – 3,60,000 – 22,500
= 67,500

Operating Ratio = Operating Cost /  Net Sales × 100
= 67,500 / 4,50,000 × 100
= 15%

Case V:

Gross profit = 20% on sales

Let Sales = x
Gross profit = x × 20 / 100
= 20x / 100

Sales = Cost Goods Sold + Gross Profit
X = 8,00000+20x / 100
Or, 80x / 100 = 8,00,000
Or, x =10,00,000
∴ Sales = 10,00,000

Operating Cost = Cost of Goods Sold + Operating Expenses
= 8,00,000 + 50,000
= 8,50,000

Operating Profit = Net Sales- Cost of goods sold – Operation expenses
= 10,00,000 – 8,00,000 – 50,000

= 1,50,000

Operating Profit Ratio = Operating Profit /  Net Sales×100
= 1,50,000 / 10,00,000 × 100
= 15%