Page 379 - VIRANSH COACHING CLASSES

Operating Expense = Office and Admin. Expense + Selling and
Distribution Expenses
= 34,000 + 36,000 = ` 70,000

2,40,000 + 70,000
Operating Ratio = × 100 = 68.89 %
4,50,000

12 : Operating Ratio

Following is the Trading and Profit and Loss account of Noha firm for the year ending 31 March
2020.

Trading and Profit and Loss Account :

Particulars (`) Particulars (`)
To Opening Stock 40,000 By Sales 4,20,000
To Purchases 2,30,000 By Closing Stock 60,000
To Wages 8000
To Gross Profit c/d 2,02,000
4,80,000 4,80,000
To Admin Exp. 12,000 By Gross Profit b/d 2,02,000
To Selling and Distribution 14,000
Expense
To Loss on sale of plant 40,000
To Net Profit 1,36,000
2,02,000 2,02,000

Calculate Operating Ratio
Cost of Goods Sold + Operating Expenses
Solution : Operating Ratio = Net Sales × 100

Cost of goods sold = Sales - Gross profit
= 4,20,000 - 2,02,000
= ` 2,18,000
2,18,000 + (12,000 + 14,000)
= 4,20,000 × 100

2,44,000
= × 100
4,20,000

= 58.09 %

C) Combined Ratio/Mixed Ratio /Composite Ratios.

13 : Return on Investment/Return on Capital Employee from following details you are re-
quired to calculate Return on investment

Profit earned = ` 50,000
Capital = ` 2,00,000
Reserve = ` 1,00,000
Loan = ` 2,00,000

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