Question

Calculate Gross Profit Ratio from the following information:

Cash Revenue from Operations is `1/4`th of the total Revenue from Operations.
Cash Revenue from Operations were ₹ 8,00,000.
Credit Purchases are `1/5`th of the total purchases.
Credit Purchases were ₹ 3,00,000.
Opening Inventory ₹ 1,00,000.
Closing Inventory was ₹ 40,000 more than the Opening Inventory.
Wages ₹ 30,000
Carriage outward ₹ 16,000

Answer 1

Cash Revenue from Operations = `1/4`th of the total revenue from operations

= ₹ 8,00,000

So, Total Revenue from Operation = 8,00,000 × 4

= ₹ 32,00,000

Credit Purchases = `1/5`th of the total purchases

= ₹ 3,00,000

So, Total Purchases = 3,00,000 × 5

= ₹ 15,00,000

Opening Inventory ₹ 1,00,000

Closing Inventory = ₹ 40,000 more than the Opening Inventory

= ₹ 1,00,000 + ₹ 40,000

= ₹ 1,40,000

Cost of Revenue from Operations = Opening Inventory + Net Purchases + Direct Expenses (Wages) − Closing Inventory

= ₹ 1,00,000 + ₹ 15,00,000 + ₹ 30,000 − ₹ 1,40,000

= ₹ 14,90,000

Gross Profit = Revenue from Operations − Cost of Revenue from Operations

= ₹ 32,00,000 − ₹ 14,90,000

= ₹ 17,10,000

Gross Profit Ratio = `"Gross Profit"/"Revenue from Operations" xx 100`

= `(₹ 17,10,000)/(₹ 32,00,000) xx 100`

= 53.44%