When calculating operating ratios from an operating statement, the denominator is usually net profit.

Name: When calculating operating ratios from an operating statement, the denominator is usually net profit.
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The denominator for operating ratios varies depending on the specific ratio being calculated. Some ratios use revenue as the denominator, while others use cost of goods sold, gross profit, or operating expenses. Net profit may be used in some ratios, but it is not always the denominator.

When Calculating Operating Ratios from an Operating Statement, the Denominator