Question

Calculate gross profit ratio from the following information

Revenue from operation net sales 6 lakh

Gross profit 25% on cost​

Answer 1

Answer:

The Gross Profit Ratio is 0.2 or 20% in this case.

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Answer 2

Answer:

Gross profit ratio = 0.2 Or 20 %

Explanation:

Given :

Revenue from operation Net Sales = Rs 6,00,000 (6 lakh)

Gross profit 25% on cost

To find :

Calculate Gross profit ratio

Solution :

Gross profit ratio =

Gross Profit / Net Sales × 100

$\dfrac{Gross \: Profit }{Net \: Sales} \times 100$

Net sales = 6,00,000

• Gross Profit = Net sales - Cost of Good Sold

⇒ 25 % on cost = 6,00,000 - Cost of Good Sold

Let,

• Cost of Good Sold = x

Net Sales = Cost of Good Sold + Gross profit

⇒ 6,00,000 = x + 25 % of x

⇒ 6,00,000 = x + 0.25 x

⇒ 6,00,000 = 1.25 x

⇒ x = $\dfrac{6,00,000}{1.25} = 4,80,000$

⇒ x = 4,80,000

Cost of Good Sold = Rs 4,80,000

• Gross Profit = Net Sales - Cost of Good Sold

Gross Profit = 6,00,000 - 4,80,000

Gross Profit = 1,20,000

★ Gross profit ratio =

$\dfrac{Gross \: Profit }{Net \: Sales} \times 100$

⇒$\dfrac{1,20,000}{6,00,000} \times 100$

⇒ 0.2 × 100

⇒ 20 %

Therefore,

Gross profit ratio = 0.2 Or 20 %