Question

From the following statement of profit. and loss of Dericston Ltd. Calculate

1. Gross Profit ratio
2. Net Profit ratio.

Statement of Profit and Loss
Particulars	₹
I. Revenue from operations	24,00,000
II. Other income:
Income from investment	70,000
III. Total revenues (I+II)	24,70,000
IV. Expenses:
Purchases of stock-in-trade	18,80,000
Changes in inventories	-80,000
Employee benefits expense	2,90,000
Other expenses	1,10,000
Provision for tax	30,000
Total expenses	22,30,000
V. Profit for year	2,40,000

Answer 1

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

Gross profit = Revenue from operations – Cost of revenue from operation

Cost of revenue from operations = Purchase + Change in inventories

= 18,80,000 – 80,000 = Rs. 18,00,000

Gross Profit = 24,00,000 – 18,00, 000 = Rs. 6,00,000

Gross Profit Ratio = `600000/2400000 xx100` = 25%

Net Profit ratio = `600000/2400000 xx 100`

Net Profit ratio = `240000/2400000 xx 100` = 10%