Question

5. (G.P. Ratio) Calculate Gross Profit ratio in the following cases ;
(a) Opening inventory 50,000 ; Closing inventory 70,000 ; Inventory Turn over 6 times
Gross Profit is 20% on Cost.
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Answer 1

Answer:

60000

Explanation:

cost of revenue

inventory turnover ratio = from operation/

average inventory

opening inventory +

average inventory = closing inventory/ 2

= 50000 + 70000/2

= 60000

6 time = cost of revenue from operation/

60000

6 time × 60000 = cost of revenue from

operation

cost of revenue from operation = 360000

if GP is 20% of cost of revenue from operation it means goods of rupees hundred is sold at cost rupees 120

if cost of revenue from operation = 360000

GP = 360000 × 20/120

GP = 60000