Question

Gross Profit of a Company is 20% of Cost of Revenue from Operations. Its Cash Revenue from Operations are `1/3`rd of its Credit Revenue from Operations. Calculate the G.P. Ratio if the Cash Revenue from Operations are ₹ 3,00,000.

Answer 1

Revenue from Operations = Cash Revenue from Operations + Credit Revenue from Operations

= ₹ 3,00,000 + ₹ 3,00,000 × 3

= ₹ 3,00,000 + ₹ 9,00,000

= ₹ 12,00,000

Let the Cost of Revenue from Operations be x.

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

20% of x = ₹ 12,00,000 − x

x + `20/100` x = ₹ 12,00,000

`120/100` x = ₹ 12,00,000

x = `(₹ 12,00,000 xx 100)/120`

x (Cost of Revenue from Operations) = ₹ 10,00,000

Gross Profit of a Company is 20% of Cost of Revenue from Operations

Gross Profit = `20/100 xx ₹ 10,00,000`

= ₹ 2,00,000

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

= `(₹ 2,00,000)/(₹ 12,00,000) xx 100`

= 16.67%