Calculate Operating Profit Ratio,In Each of the Following Alternative Cases: - Accountancy

Sum

Calculate Operating Profit Ratio,in each of the following alternative cases:
Case 1:  Revenue from Operations (Net Sales) ₹ 10,00,000; Operating Profit ₹ 1,50,000.
Case 2:  Revenue from Operations (Net Sales) ₹ 6,00,000; Operating Cost ₹ 5,10,000.
Case 3:  Revenue from Operations (Net Sales) ₹ 3,60,000; Gross Profit 20% on Sales; Operating Expenses ₹ 18,000
Case 4: Revenue from Operations (Net Sales) ₹ 4,50,000; Cost of Revenue from Operations ₹ 3,60,000; Operating Expenses ₹ 22,500.
Case 5: Cost of Goods Sold, i.e., Cost of Revenue from Operations ₹ 8,00,000; Gross Profit 20% on Sales; Operating Expenses ₹ 50,000.

Solution

Case 1

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

= 150000/1000000 xx 100 = 15%

Case II

Operating Profit = Net Sales - Operating Cost

= 600000 - 510000 = 90000

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

= 90000/600000 xx 100 = 15%

Case III

Net Sales = 3,60,000

Gross Profit = 20% on Sales

Gross Profit =20/100 xx 360000 = 72000

Operating Profit = Gross Profit - Operating Expenses

= 72000 - 18000 = 54000

Operating Profit ratio = "Operating Profit"/"Net Sales" xx 100

= 54000/360000 xx 100 = 15 %

Case IV

Net Sales = 4,50,000

Operating Profit = Net Sales - Cost of Goods Sold - Operating Expenses

= 450000 - 360000 - 22500 = 67500

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

= 67500/450000 xx 100 = 15 %

Case V

Gross Profit = 20% on Sales

Let Sales = x

∴ Gross Profit = x xx 20/100 = (20x)/100

Sales = Cost Goods Sold + Gross Profit

x = 800000 + (20x)/100

or,(80x)/100 = 800000

or, x = 1000000

∴ Sales = 1000000

Operating Cost = Cost of Goods Sold + Operating Expenses

= 800000 + 50000 = 850000

Operating Profit = Net Sales - Cost of goods Sold - Operating Expenses

= 1000000 - 800000 - 50000 = 150000

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

= 150000/1000000 xx 100 = 15%`

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APPEARS IN

TS Grewal Class 12 Accountancy - Analysis of Financial Statements
Chapter 3 Accounting Ratios
Exercise | Q 120 | Page 106