Ratio Analysis
shankar (chennai) (130 Points)
24 March 2019
What is the difference between operating ratio and profit ratio?
3 Replies
Lisha Bansal
(CA Finalist)
(2595 Points)
Replied 26 March 2019
There are 3 types of profit ratios: operating, net profit and gross profit ratio. These profit ratios are calculated by dividing profit to net sales. More higher, more better.
Operating ratio is found by dividing operating expenses to sales. It is a measure of efficiency. The lesser it is, the better.
Lisha Bansal
(CA Finalist)
(2595 Points)
Replied 26 March 2019
There are 3 types of profit ratios: operating, net profit and gross profit ratio. These profit ratios are calculated by dividing profit to net sales. More higher, more better.
Operating ratio is found by dividing operating expenses to sales. It is a measure of efficiency. The lesser it is, the better.
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