Operating Ratio The operating ratio of a retail business is the ratio, expressed as a percentage, of operating costs (everything from advertising expenses to equipment depreciation) to net sales (i.e., gross sales minus returns and allowances). An operating ratio less than 100% indicates a profitable operation, while an operating ratio in the 80%−90% range is extremely good. If a company has net sales of $236,460 in one period, write an inequality describing the operating costs that would keep the operating ratio below 90%.
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