Question

    Which of the following ratio is given by the formula

    EBIT by Sales?
    A Gross Profit Ratio Correct Answer Incorrect Answer
    B Operating profit ratio Correct Answer Incorrect Answer
    C Operating Ratio Correct Answer Incorrect Answer
    D Net Profit Ratio Correct Answer Incorrect Answer
    E Return on Capital Correct Answer Incorrect Answer

    Solution

    Operating profit ratio is one of the profitability ratios calculated as operating profit/revenue o sales. The operating profit is represented by EBIT (earnings before interest and tax). Operating Profit = EBIT/Sales Operating profit ratio helps to analyse the performance of business and throws light on the operational efficiency of the business.

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