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Question
Calculate (i) Operating Profit Ratio, and (ii) Net Profit Ratio from the following:
| ₹ | |
| Revenue from Operations | 8,30,000 |
| Return Inwards | 30,000 |
| Cost of Revenue from Operations | 5,00,000 |
| Office Expenses | 40,000 |
| Selling Expenses | 18,000 |
| Interest on Debentures | 12,000 |
| Loss by Accident | 24,000 |
| Interest received on Investments | 10,000 |
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Solution
(i)
Net Revenue from Operations = Revenue from Operations − Return Inwards
= ₹ 8,30,000 − ₹ 30,000
= ₹ 8,00,000
Gross Profit = Net Revenue from Operations − Cost of Revenue from Operations
= ₹ 8,00,000 − ₹ 5,00,000
= ₹ 3,00,000
Operating Expenses = Office Expenses + Selling Expenses
= ₹ 40,000 + ₹ 18,000
= ₹ 58,000
Operating Profit = Gross Profit − Operating Expenses
= ₹ 3,00,000 − ₹ 58,000
= ₹ 2,42,000
Operating Profit Ratio = `"Operating Profit"/"Net Revenue from Operations" xx 100`
= `(₹ 2,42,000)/(₹ 8,00,000) xx 100`
= 30.25%
(ii)
Net Profit = Gross Profit − Indirect Expenses + Other Incomes
Indirect Expenses = Office Expenses + Selling Expenses + Interest on Debentures + Loss by Accident
= ₹ 40,000 + ₹ 18,000 + ₹ 12,000 + ₹ 24,000
= ₹ 94,000
Other Incomes = Interest received on Investments = ₹ 10,000
Net Profit = ₹ 3,00,000 − ₹ 94,000 + ₹ 10,000
= ₹ 2,16,000
Net Profit Ratio = `"Net Profit"/"Net Revenue from Operation" xx 100`
= `(₹ 2,16,000)/(₹ 8,00,000) xx 100`
= 27%
