Practice Operating Ratio (1.4.4.3) - Ratio Analysis - ICSE 12 Accounts

Practice: Operating Ratio

Lesson 1.4.4.3Ratio Analysis

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10 questions

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6 questions · about 4 min · pass mark 70%. Hints available.
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4 questions · about 3 min · pass mark 70%. Hints available.
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6 sample questions

Question 1.
Calculate the Operating Ratio for a company with Net Sales of ₹200,000, COGS of ₹120,000, and Operating Expenses of ₹40,000.
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Use the formula: (COGS + Operating Expenses) / Net Sales.
Question 2.
If the Operating Ratio for a company is 75%, what percentage of sales is spent on operational costs?
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The Operating Ratio directly indicates this percentage.
3Question 3.
What does a lower Operating Ratio indicate about a company?
- Higher operational efficiency
- Higher operational costs
- Lower sales
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Connect the ratio with financial performance.
4Question 4.
True or False: The Operating Ratio can potentially influence investor decisions.
- True
- False
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Think about stakeholders' perspectives.
Question 5.
A company reported Net Sales of ₹900,000, COGS of ₹600,000, and Operating Expenses of ₹250,000. Calculate the Operating Ratio and assess the implications for business strategies.
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Consider how to interpret the calculated ratio.
Question 6.
Suppose Company B has an Operating Ratio of 70%. If the Total Net Sales increase to ₹1,200,000, how could they purposefully lower their Operating Ratio?
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Think about both cost management and revenue growth.

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