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Sumit, India
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How can you calculate Operating Ratio in case of services firm?
🔥 NEW I need help to calculate the operating profit ratio (operating profit percentage) of a service firm as there are no goods.
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Sahr Dauda
Student (University), Sierra Leone
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Calculation of Operating Ratio in Service Firms
Even in service firms there are products, though they may not be tangible goods. And expenses must have been incurred to make these "goods" (or make the services possible) that brings in the revenue.
Define the expenses and define the revenues. You now know your sales and your expense, so you can get your profit.
A ratio of this profit in relation to your sales generated (sales) will give your operating ratio.
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