Question

From the following details of a business concern calculate net profit ratio.

Particulars	Amount Rs.
Revenue from operations	9,60,000
Cost of revenue from operations	5,50,000
Office and administration expenses	1,45,000
Selling and distribution expenses	25,000

Answer 1

Net Profit Ratio = `"Net Profit"/"Revenue from operations" xx 100`

Gross profit = Revenue from operations – Cost of revenue from operation

= 9,60,000 - 5,50,000 = Rs. 4,10,000

Operating Profit = Gross Profit – Operating Exps

Operating Exps = Office & Administrative Exps + Selling & Distribution Exps

= 1,45,000 + 25,000 = Rs. 1,70,000

Operating Profit = 4,10,000 – 1,70,000

Operating Profit = Rs. 2,40,000

Net Profit ratio = `240000/960000 xx 100` = 25%