Question
Ratio of net profit before interest and tax to sales is
:Solution
Answer: c. Operating profit ratio The ratio of net profit before interest and tax to sales is called the operating profit ratio. This ratio is used to determine the operating efficiency and profitability of a business. It indicates the percentage of sales that is available to cover the operating expenses and generate operating profit before considering the effects of financing and taxes. The formula for calculating the operating profit ratio is: Operating profit ratio = (Operating profit / Net sales) x 100
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