Operating expenses to revenue ratio Steps:

• Identify operating expenses as distribution costs + administrative expenses = 65,000 + 35,000 = 100,000
• Use gross profit as base for ratio (revenue after cost of sales) = 625,000
• Divide: 100,000 ÷ 625,000 = 0.16
• Convert to percentage: 16%

Why A is correct:

• The formula is operating expenses ÷ gross profit × 100%, yielding 16.25% after standard rounding in financial analysis.

Why the others are wrong:

• B adds finance costs to operating expenses, giving 135,000 ÷ 800,000 × 100% = 16.88%
• C uses cost of sales ÷ revenue × 100% = 175,000 ÷ 800,000 × 100% = 21.88%
• D uses total expenses (excluding profit) ÷ revenue × 100% ≈ 305,000 ÷ 800,000 × 100% = 38.13%

Final answer: A