operating ratio is 60% office and selling expenses to revenue from operations ratio is at 5% Calculate Gross - Accountancy - Accounting Ratios

Question

operating ratio is 60% office and selling expenses to revenue from
operations ratio is at 5% Calculate Gross Profit ratio

Neha Chopra · Accepted Answer

Dear Student,

Given , Operating Ratio = 60% , Office and Selling Expenses to
revenue from operations ratio = 5%

We know That ,

Operating ratio =
Operating Expenses Revenue from Operations×100

Because Operating Expenses = COGS + Selling and Distribution
Expenses , Therefore
Operating Ratio=COGS +Office and Selling ExpensesRevenue from Operations×100
( Note : COGS = Cost of goods sold )

=>60% = COGSRevenue from Operations + 5%

Hence COGSRevenue from Operations = 55%

Now , Gross Profit ratio =
Gross ProfitRevenue from Operations×100

Which can also be written as ,
Revenue from Operations - COGSRevenue from Operations × 100     OR , Revenue from OperationsRevenue from Operations - COGSRevenue from Operations×100
Putting Values in above Formula
GP Ratio = 1- 55% = 45%

Regards

operating ratio is 60%. office and selling expenses to revenue from operations ratio is at 5%. Calculate Gross Profit ratio.