Question

average inventory 160000 inventory turnover ratio 6 times selling price 25% above cost calculate gross profit ratio​

Answer 1

Answer:

Answer:

Gross Profit Ratio will be 20 %

Explanation:

Given :

Opening Inventory = 200000

Closing Inventory = 120000

Inventory Turnover Ratio = 8 times

Selling Price 25 % above Cost

To find :

Calculate Gross Profit Ratio

Solution :

Inventory Turnover Ratio =

\Rightarrow{\sf{\dfrac{Cost \: Of \: Goods \: Sold}{Average \: Inventory}}}⇒

AverageInventory

CostOfGoodsSold

\Rightarrow{\sf8={\dfrac{Cost \: Of \: Goods \: Sold}{Average \: Inventory}}}⇒8=

AverageInventory

CostOfGoodsSold

Average Inventory =

\Rightarrow{\sf{\dfrac{Opening \: Inventory \: + \: Closing \: Inventory}{2}}}⇒

2

OpeningInventory+ClosingInventory

\Rightarrow{\sf{8 \: = \: {\dfrac{Cost \: Of \: Goods \: Sold}{\frac{2,00,000 \: + \: 1,20,000}{2}}}}}⇒8=

2

2,00,000+1,20,000

CostOfGoodsSold

\Rightarrow{\sf{8 \: = \dfrac{Cost \: Of \: Goods \: Sold}{1,60,000}}}⇒8=

1,60,000

CostOfGoodsSold

⇒ Cost of Goods Sold = 1,60,000 × 8

Cost of Goods Sold = 12,80,000

Selling Price 25 % above cost

\Rightarrow{\sf{12,80,000 \times \dfrac{25}{100}}}⇒12,80,000×

100

25

⇒ 3,20,000

⇒ Net Sales = 12,80,000 + 3,20,000

Net Sales = 16,00,000

Gross Profit = Net Sales - Cost Of Goods Sold

⇒ 16,00,000 - 12,80,000 = 3,20,000

Gross Profit = 3,20,000

Gross Profit Ratio =

\Rightarrow{\sf{\dfrac{Gross\:Profit}{Net\:Sales} \times 100}}⇒

NetSales

GrossProfit

×100

\Rightarrow{\sf{\dfrac{3,20,000}{1,60,000} \times 100}}⇒

1,60,000

3,20,000

×100

⇒ 20 %

∴ Gross Profit Ratio will be 20 %