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12th Class Accountancy Accounting Ratios Question Bank Case Based - Accounting Ratios

  • question_answer
    Read the following hypothetical text and answer the given questions:
    The motto of Tharma Ltd.' a company engaged in the manufacturing of low-cost generic medicines, is 'Healthy India'. Its management and employees are hardworking honest and motivate The net profit of the company doubled during the year ended 31st March, 2020. Encouraged by its performance, the company decided to give bonus to all employees at double the rate than last year.
    Statement of Profit and Loss for the year ended 31st March. 2020
    Particulars Note No. Amt. (Rs.)
    I. Revenue from Operations (Net Sales)   20,00,000
    II. Expenses: Cost of Materials Consumed Changes in Inventories of Finished Goods and WIP Employees Benefit Expenses Finance Costs Other Expenses   11,25,000      50,000      30,000      25,000   1,70,000
    Total Expenses   14,00,000
    III. Profit from Operations (I - III)   6,00,000
    Based on the above information you are required to answer the following questions:
    Operating ratio for the year 2020 will be:
     

    A) 60.75%

    B) 61.75%

    C) 68.75%             

    D) None of these

    Correct Answer: C

    Solution :

    [c] 68.75%
    Hint:
    \[\operatorname{Operating} Ratio=\frac{\begin{align}   & Cost of Revenue from Operations\  \\  & + Operating Expenses \\ \end{align}}{\begin{array}{*{35}{l}}    Revenue from Operations  \\    \left( Net Sales \right)  \\ \end{array}}\times 100\]
    \[\frac{11,75,000~2,00,000}{20,00,000}\times 100\]=68.75%
     


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