Question

state operating ratio if operating profit ratio is 60%?


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Answer 1

Answer:

State whether Purchase of goods costing Rs. 20,000' will increase, decrease or not change the operating ratio.

Explanation:

ANSWER

Operating Ratio = Operation Cost/Net Sales * 100

Also, Operating Cost = Cost of Goods Sold + Operating Expenses

Since, cost of goods sold includes purchases as well as closing stock so a purchase of Rs. 20,000 worth of goods will increase the value of both closing stock as well as purchases and hence will lead to change in the value of cost of goods sold. Thus, the operating ratio will remain unchanged.

Answer 2

Answer:

Here is your answer :

Operating Ratio = Operation Cost/Net Sales * 100

Also, Operating Cost = Cost of Goods Sold + Operating Expenses

Since, cost of goods sold includes purchases as well as closing stock so a purchase of Rs. 20,000 worth of goods will increase the value of both closing stock as well as purchases and hence will lead to change in the value of cost of goods sold. Thus, the operating ratio will remain unchanged.

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