Lamphere was an original proponent of PSR because of his former role as the chairman of Illinois Central Railway, a freight … 6 By the An operating ratio of 98.44 per cent means that the railways spent Rs 98.44 to earn Rs 100. Operating Ratio is an important indicator for Indian Railways. Hence, Operating Ratio would have been at 99.54% instead of 96.50% (as shown by the railways). The CAG report spelled out the impact of … one rupee). A measure of expenditure against revenue, the operating ratio shows how efficiently the railway is operating and how healthy its finances are. However lower O.R. 2. 21,000 crore on account of 7th pay commission. Operating ratio - Canadian National Railway 2013-2019 Union Pacific Railroad - gross ton-miles 2013-2019 Norfolk Southern Railway - operating expenses by type 2019 Workbook: Union Budget 2017 - … The key reason for 2% increase in budgeted OR is the additional burdens of Rs. The operating ratio for Apple means that 78% of the company's net sales are operating expenses. 618 0 obj <>/Filter/FlateDecode/ID[<89C0D4CC58CF5945B524EF3CEDE9B83E>]/Index[602 53]/Info 601 0 R/Length 85/Prev 123192/Root 603 0 R/Size 655/Type/XRef/W[1 2 1]>>stream Income can be increased by raising fares and expanding its revenue streams. %%EOF Railways incurred Rs 52,517.71 crore as the ordinary working expenses against the target of Rs 50,487.36 crore for the period ending July, this fiscal. 654 0 obj <>stream By increasing operating expenses by $400 to attract new business that boosts revenue to $1,500, the railroad increases operating profit from $500 to $600 even though the operating ratio has climbed to 60%. If answer is No, what is the reason and which one is the alternative one ? CP’s operating ratio for the year ended December 31, 2012 was 83.3% (and its “adjusted operating ratio” for the same period was 77.0%). of 92%. Worst Operating Ratio for Indian Railways in years! %PDF-1.6 %âãÏÓ The Comptroller and Auditor General (CAG) on Monday painted a grim picture of the Indian Railways' financial health as it said that the operating ratio in 2017-18 was 98.44%— the worst in 10 years. While in 2000-2001 it was 98 per cent, the following year it improved to 96. The calculations of railway might go haywire due to absence of a solid road map to boost the earnings. Edited excerpts from an interview with Sudheer Pal Singh:Based on your assessment of fiscal indicators like… The best ever OR of Indian Railways was 74.7% in 1963-64. It is also called the operating cost ratio or operating expense ratio. Railways’ operating ratio at 98.44 per cent in 2017-18, worst in 10 years: CAG The CAG in its report on the Railways’ finances, said that the Railways would have ended up with a negative balance of Rs 5,676.29 crore instead of a surplus of Rs 1,665.61 crore but for the advance received from NTPC and IRCON. The Operating Ratio of the Indian Railways was 95.3 per cent in 2009-10, 94.6 per cent in 2010-11 and 94.9 per cent in 2011-2012. An operating ratio of 98.4% means the Railways spent 98.4 paise to earn Re 1 in the last financial year, implying a tiny surplus. (Representational) The Indian Railways’ operating ratio in 2017-18 was at 98.44 per cent, the worst in the last 10 years, the Comptroller and Auditor General of … Despite efforts by Indian Railways, the national transporter may record its worst operating ratio at 98.5 per cent in year 2017-18. Apple's operating ratio must be examined over several quarters to get a … Thereafter, the O.R. helps in generating internal resources for meeting requirement of Plan Expenditure on Safety (RSF), Amenities to Passengers & Staff (D.F) and other Capital investments such as laying of new lines, acquisition of Rolling Stock etc (Capital Fund). The financial health of the railways is determined by its Operating Ratio (OR). It indicates how efficiently railways are able to earn with every rupee spent on development. CP’s operating ratio has been on a decreasing trend in recent years. This rose to 1.24 lakh crore in FY 19 at an operating ratio of 97.3%. Operating ratio indicates the organization/company’s operating expenses divided by its operating revenues, which helps to check its performance. The operating ratio for Indian Railways was 5% in 2015-16 and increased to 96.5% in 2016-17 and 98.5% in 2017-18 Understanding the figure: Exclusion of the advance by other PSUs would otherwise have increased the operating ratio to 102.66 per cent Computation of the Operating Ratio from the set of figures given in the problem. hÞb```f``ZÍÀÂÀ ià À€ @ äØäwÍ9ʜÀ¶¨¼€ŸeîÆwöÉ÷žFBo6°u4°ut0d  TÍ@ÓDˆi>°5 ËÀËþ¤ÀcŸë#Չ3:Ÿ4q'òx¼ú{€YÒ¾y)X…㺠ÍÆÀ /¤™X>)9Æ{§4#U ™˜.ï In 2014-15, the budgeted Operating Ratio was 92.5% against which it has been able to get some better position by achieving 91.3%. Rail Budget 2016: Suresh Prabhu Misses Operating Ratio … The operating ratio of the railways is expected to improve from 98.4% in 2017-18 to 96.2% in 2018-19 and to 95% in 2019-20, he said. Historically, an Operating Ratio of Indian railway was not a problem in 1960s and 1970s. Operating Ratio can be decreased by reducing expenditure and augmenting income and efficiency. The operating ratio is a major measure of profitability in the railroad industry. Raising passenger and freight fares are always politically sensitive issues. In 2014-15, the budgeted operating ratio was 92.5%, against which railways was able to achieve 91.3%. Likely Questions: 1. The national transporter's worst performance in the last two decades was in 20002001 when its operating ratio was 98.3 per cent. This is the company's operating expenses as a percentage of revenue. Further, half of railways earnings generally go towards meeting wage and pensions. The operating ratio of the Railways could register its worst performance ever since 2000-2001 The last time Railways clocked operating ratio this bad was in years 2000-2002. 602 0 obj <> endobj Railways' Operating Ratio Worsens, It Spends Rs 111 To Earn Rs 100 Operating ratio is a gauge of operational efficiency that measures expenses as a proportion of revenue. went up to 88.3% in 2008-09 and 95.3% next year. one rupee). A lower figure of Operating Ratio is thus regarded better and is indicative of better financial health of the system. Norfolk Southern predicts operating ratio to improve at least 100 basis points in 2019 compared with 65.4% achieved in 2018. The Indian Railways’ staff and pension bill was 80,791 crore in FY15, when the operating ratio was 91.3%. O.R. In rail road sector, an operating ratio of 80 or lower is considered desirable. “The Indian Railways’ operating ratio at 98.44 per cent in 2017-18 was the worst in the last 10 years,” the national auditor, Comptroller and Auditor General (CAG), said in a report tabled in Parliament Monday. Operating Ratio indicates how much railway spends to earn a rupee. During the observed time, the best performance was recorded in the … 3.Is OR, best financial ratio to show the performance of Railways ? A railway’s operating ratio represents the ratio of its operating costs to its revenue. In 2007-08, the OR was 75.9% due to good economic growth and robust earnings from freight. Operating ratio is a key indicator of a commercial organisation’s financial health. CSX’s operating ratio was 60.3 percent, down from 66.3 percent in 2017, as the railroad continues to cut costs and increase revenue under the shift to Precision Scheduled Railroading that former CEO E. Hunter Harrison began in March 2017. An operating ratio of 98.44 per cent means that the Railways spent Rs 98.44 to earn Rs 100. The logic behind this is that around half of railways’ earning go towards meeting wage and pension bills of employees in normal course, and due to huge pay pressure, the ratio might worsen in budget year 2016-17. During the observed time, … Operating Ratio indicates how much railway spends to earn a rupee. New Delhi: The Indian Railways will see a significant improvement in its operating ratio with reduction in its cost of operations and adaptation of modern technology, all envisaged under the National Railway Plan, chairman Railway Board VK Yadav told ET. Besides the working expenses, there are other expenditures also involved, which are causing the operating ratio to exceed the target, said a senior official from the Railways. The operating ratio — a measure of expenditure against revenue — is an important parameter to gauge the health of railway finances. The operating ratio formula is the ratio of the company’s operating expenses to net sales, where operating expenses include administrative expenses, selling and distribution expenses, cost of goods sold, salary, rent, other labor costs, depreciation, etc. File Photo The Operating Ratio of the Indian Railways … In 2015-16, the operating ratio is 90% mainly due to savings of Rs. Operating Ratio can be decreased by reducing expenditure and augmenting income and efficiency. 5 Accordingly, a lower operating ratio means a railway is incurring less operating cost per dollar of revenue. Published by Vaibhav Asher, Oct 16, 2020 In the financial year 2019, the operating ratio of Indian Railways was at 97.29 percent. In finance, the Operating ratio is a company's operating expenses as a percentage of revenue. The national transporter’s worst performance in the last two decades was in 2000-2001 when its operating ratio was 98.3 per cent. How it is calculated ? Indian Railways has the worst operating ratio in the last ten years at 98.44% and its revenue surplus has decreased by more than 66% from Rs 4,913 crore in 2016-17 to Rs 1,665.61 crore in 2017-18(AP) An operating ratio of 98.44 per cent means that the Railways spent Rs 98.44 to earn Rs 100. On the expenditure side, Railways was hoping that the figures would be around Rs 1.21 lakh crore. What is Operating Ratio ? Operating ratio was a mathematically derived number that we could communicate to employees as a measurement, “but it was never an objective,” said Gil Lamphere, an early proponent of PSR, at the N orth East Association of Rail Shippe rs conference last week. A higher ratio indicates poorer ability to generate surplus. 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