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# Calculate Gross Profit Ratio from the Following Data: - Accountancy

Sum

Calculate Gross Profit Ratio from the following data:

Average Inventory ₹3,20,000; Inventory Turnover Ratio 8 Times; Average Trade Receivables ₹4,00,000; Trade Receivables Turnover Ratio 6 Times; Cash Sales 25% of Net Sales.

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#### Solution

Inventory Turnover Ratio = 8 times
Average Inventory = Rs 3,20,000

Stock turnover Ratio = "Cost of Goods Sold"/"Average Stock" = Cost of Goods Sold/320000 = 8 times

Cost of Goods sold = 25,60,000
Trade Receivables Turnover Ratio = 6 times
Average Trade Receivables = Rs 4,00,000

Trade Receivable Turnover Ratio = "Net Credit Sales"/"Average Trade Receivables"

6 = "Net Credit Sales"/400000

Net Credit Sales = 24,00,000
Total Sales = Cash Sales + Credit Sales
Total Sales = 25% of Total Sales + Credit Sales
75% of Total Sales = 24,00,000

Total Sales =2400000/75% = 3200000

Gross Profit = Total Sales – Cost of Goods Sold
= 32,00,000 – 25,60,000 = 6,40,000

Gross Profit Ratio = "Gross Profit"/"Net Sales" xx 100

= 640000/3200000 xx 100 = 20 %

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#### APPEARS IN

TS Grewal Class 12 Accountancy - Analysis of Financial Statements
Chapter 3 Accounting Ratios
Exercise | Q 108 | Page 105
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