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Question
From the following information, calculate (upto two decimal places):
- Gross Profit Ratio
- Operating Ratio
| ₹ | |
| Net Revenue from Operations | 14,00,000 |
| Credit Revenue from Operations | 10,00,000 |
| Gross Profit | 5,00,000 |
| Depreciation on fixed assets | 40,000 |
| Profit on Sale of Land | 10,000 |
| Selling Expenses | 60,000 |
Numerical
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Solution
(i) Gross Profit Ratio = `"Gross Profit"/"Net Revenue from Operations" xx 100`
= `(₹ 5,00,000)/(₹ 14,00,000) xx 100`
= 35.71%
(ii) Cost of Revenue from Operations = Net Revenue from Operations − Gross Profit
= ₹ 14,00,000 − ₹ 5,00,000
= ₹ 9,00,000
Operating Expenses = Depreciation on fixed assets + Selling Expenses
= ₹ 40,000 + ₹ 60,000
= ₹ 1,00,000
Operating Ratio = `("Cost of Revenue from Operations" + "Operating Expenses")/"Net Revenue from Operations" xx 100`
= `(₹ 9,00,000 + ₹ 1,00,000)/(₹ 14,00,000) xx 100`
= `(₹ 10,00,000)/(₹ 14,00,000) xx 100`
= 71.43%
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