A company earns a gross profit of 20% on cost. Its credit sales are twice its cash sales. If the credit sales are * 5,00,000, calculate the gross profit ratio of the company.
Answers
Answered by
49
Answer:
The gross profit ratio of the company is 16.67 %.
Explanation:
Solution :
Credit Sales are 5,00,000
Cash Sales = 2,50,000
Net Sales = Credit Sales + Cash Sales
= 5,00,000 + 2,50,000
=, 7,50,000
Net Sales = 7,50,000
Let,
Cost = 100
Gp = 20
Sales = 120
So,
Cost of Goods Sold = (100/120) × 7,50,000
= 6,25,000
Cost of Goods Sold = 6,25,000
Gross Profit = Net Sales - Cost of Goods Sold
= 750,000 − 625,000
= 1,25,000
Gross Profit = 1,25,000
★ Gross Profit Ratio :
Gross Profit Ratio = (Gross Profit / Net Sales) × 100
= (1,25,000/7,50,000) × 100
= 16.67 %
Gross Profit Ratio = 16.67 %
Therefore, the gross profit ratio of the company is 16.67 %.
Similar questions