Assertion (A): A high operating ratio indicates a favorable position. Explanation: In finance, the Operating ratio is a company's operating expenses as a percentage of revenue. This financial ratio is most commonly used for industries that require a large percentage of revenues to maintain operations, such as railroads. In railroading, an operating ratio of 80 or lower is considered desirable. Operating Ratio refers to a metric used by a company to determine how efficient a companys management is at keeping operating costs low while at the same time generating revenues or sales, by comparing the total operating expenses of a company to that of its net sales. A higher ratio would indicate that expenses are more than the companys ability to generate sufficient revenue and may be considered inefficient. Similarly, a relatively low ratio would be considered a good sign as the companys expenses are less than that of its revenue. ?Thus, the assertion is incorrect. Reasoning (R): A high operating ratio leaves a high margin to meet non-operating expenses. Explanation:Operating Ratio = (Operating Expenses / Net Sales) * 100. The operating ratio is used to measure the operational efficiency of the management. It shows whether or not the cost component in the sales figure is within the normal range. A low operating ratio means a high net profit ratio (i. e. , more operating profit) and vice versa. A high operating ratio leaves less margin to meet non-operating expenses. Thus, the reason is incorrect. Both Assertion And Reason Are Incorrect.