Sir this is RTP Nov 2019 question
In this question as per (iii) and (iv) part…. Operating profit is GP-SGA
while as per (viii)and (ix) part Operating profit is NP+ interest on loan
So which formula we have to follow… please tell
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Hello,
Part 3 :- operating ratio = operating cost ratio ( OCR ) = O.C / Sales
part 4 :- Operating PROFIT Ratio = 1 – OCR
Part 8 :- intt coverage ratio :- EBIT / intt { The interest coverage ratio is a debt and profitability ratio used to determine how easily a company can pay interest on its outstanding debt }
Part 9 :- ROCE = EBIT/ Cap. Employed { Return on capital employed (ROCE) is a financial ratio that can be used in assessing a company’s profitability and capital efficiency. In other words, this ratio can help to understand how well a company is generating profits from its capital as it is put to use. }
I have mentioned above the formulae required to solve the problems and the explanation as well.
If you still face any difficulty feel free to connect here again.
Sir in this question…how to calculate value of operating profit….?
Operating profit=NP+ interest on loan( in part 8 and part 9 , it is used)
OR
Operating profit=GP- Administration expenses- Selling and distribution expenses ( in part 3 and part 4 it is used)……….that is…..{ NP+ interest on loan – Dividend – Interest on investment }