Question

Calculate G.P. Ratio from the following:

Cash Revenue from Operations are `1/3`rd of total Revenue from Operations; Cash Revenue from Operations were ₹ 6,00,000; Credit Purchases are 25% of total purchases; Credit Purchases were ₹ 3,00,000; Opening Inventory ₹ 1,00,000; Closing Inventory was ₹ 50,000 more than Opening Inventory; Carriage ₹ 15,000; Wages ₹ 35,000.

Answer 1

Cash Revenue from Operations = `1/3` Revenue from Operations

Revenue from Operations = 3 × Cash Revenue from Operations

= 3 × ₹ 6,00,000

= ₹ 18,00,000

Credit Purchases = 25% of total purchases

Total Purchases = `100/25 xx` Credit Purchases

= `100/25 xx ₹ 3,00,000`

= ₹ 12,00,000

Cost of Revenue from Operations = Opening Inventory + Purchases + Carriage + Wages − Closing Inventory

= ₹ 1,00,000 + ₹ 12,00,000 + ₹ 15,000 + ₹ 35,000 − ₹ 1,50,000

= ₹ 12,00,000

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

= ₹ 18,00,000 − ₹ 12,00,000

= ₹ 6,00,000

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

= `(₹ 6,00,000)/(₹ 18,00,000) xx 100`

= 33.33%