Question

Calculate the Gross Profit Ratio from the following information :
Cash Sales being 25% of Total Sales; Purchases ₹6,90,000, Credit Sales ₹6,00,000, Excess of
Closing Stock over Opening Stock 50,000.
[Ans. 20%]

Answer 1

Answer:

Explanation:

Solution :

★ Gross Profit Ratio =

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

Net Sales = Cash Sales + Credit Sales

Let,

Net Sales = x

$\longrightarrow$ x = 25 % of x + 6,00,000

$\longrightarrow \: x \: = \: \dfrac{25}{100} x + \: 6,00,000$

$\longrightarrow$ x = 0.25x + 6,00,000

$\longrightarrow$ x - 0.25x = 6,00,000

$\longrightarrow$ 0.75x = 6,00,000

$\longrightarrow$ x = 6,00,000/0.75

$\longrightarrow$ x = 8,00,000

Net Sales = ₹ 8,00,000

Cash Sales being 25% of Total Sales = 8,00,000 × (25/100) = 2,00,000

Cash Sales = 2,00,000

Cost of Goods Sold = Purchases - Excess of Closing Stock over Opening Stock

$\longrightarrow$ 6,90,000 - 50,000

$\longrightarrow$ 6,40,000

Cost of Goods Sold = ₹ 6,40,000

Gross Profit = Net Sales - Cost of Goods Sold

$\longrightarrow$ 8,00,000 - 6,40,000

$\longrightarrow$ 1,60,000

Gross Profit = ₹ 1,60,000

★ Gross Profit Ratio =

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

$\longrightarrow \: \dfrac{1,60,000}{8,00,000} \: \times \: 100$

$\longrightarrow$ 20%

Therefore, Gross Profit Ratio = 20%

Answer 2

Answer:

Given :-

• Cash sales being 25% of total sales; Purchases is ₹690000. Credit Sales ₹600000. Excess of Closing stock over opening stock is 50000.

To Find :-

• What is the gross profit ratio.

Solution :-

First, we have to find the net sales :

Given :

• Cash Sales = 25% of total sales
• Credit Sales = ₹600000

Let,

$\mapsto \bf{Net\: sales =\: y}$

According to the question,

$\implies \sf y =\: 25\% \times y + 600000$

$\implies \sf y =\: \dfrac{25}{100} \times y + 600000$

$\implies \sf y =\: \dfrac{25y}{100} + 600000$

$\implies \sf y =\: \dfrac{25y + 60000000}{100}$

By doing cross multiplication we get,

$\implies \sf 100y =\: 25y + 60000000$

$\implies \sf 100y - 25y =\: 60000000$

$\implies \sf 75y =\: 60000000$

$\implies \sf y =\: \dfrac{\cancel{60000000}}{\cancel{75}}$

$\implies \sf y =\: \dfrac{800000}{1}$

$\implies \sf\bold{\purple{y =\:₹ 800000}}$

Hence, the net sales is ₹ 800000.

Now, we have to find the cash sales :

$\mapsto$ Cash sales being 25% of total sales :

$\implies \sf 800000 \times 25\%$

$\implies \sf 800000 \times \dfrac{25}{100}$

$\implies \sf \dfrac{200000\cancel{00}}{1\cancel{00}}$

$\implies \sf \dfrac{200000}{1}$

$\implies \sf\bold{\purple{₹200000}}$

Now, we have to find the cost of goods sold :

As we know that :

$\clubsuit$ Cost of Goods Sold or COGS Formula :

$\footnotesize\mapsto \sf\boxed{\bold{\pink{COGS =\: Total\: Purchases - Closing\: stock\: over\: opening\: stock}}}$

Given :

• Total Purchases = ₹690000
• Closing stock over opening stock = ₹50000

According to the question by using the formula we get,

$\implies \sf COGS =\: 690000 - 50000$

$\implies \sf\bold{\purple{COGS =\: ₹640000}}$

Now, we have to find the gross profit :

As we know that :

$\clubsuit$ Gross Profit Formula :

$\mapsto \sf\boxed{\bold{\pink{Gross\: Profit =\: Net\: Sales - COGS}}}$

Given :

• Net Sales = ₹800000
• COGS = ₹640000

According to the question by using the formula we get,

$\implies \sf Gross\: Profit =\: 800000 - 640000$

$\implies \sf\bold{\purple{Gross\: Profit =\: ₹160000}}$

Now, atlast we have to find the gross profit ratio :

As we know that :

$\clubsuit$ Gross Profit Ratio Formula :

$\mapsto \sf\boxed{\bold{\pink{Gross\: Profit\: Ratio =\: \bigg\lgroup \dfrac{Gross\: Profit}{Net\: Sales} \times 100\bigg\rgroup}}}$

Given :

• Gross Profit = ₹160000
• Net Sales = ₹800000

According to the question by using the formula we get,

$\longrightarrow \sf Gross\: Profit\: Ratio =\: \bigg\lgroup \dfrac{160000}{800000} \times 100\bigg\rgroup$

$\longrightarrow \sf Gross\: Profit\: Ratio =\: \bigg\lgroup \dfrac{160\cancel{00000}}{8\cancel{00000}}\bigg\rgroup$

$\longrightarrow \sf Gross\: Profit\: Ratio =\: \bigg\lgroup \dfrac{\cancel{160}}{\cancel{8}}\bigg\rgroup$

$\longrightarrow \sf\bold{\red{Gross\: Profit\: Ratio =\: 20\%}}$

${\small{\bold{\underline{\therefore\: The\: gross\: profit\: ratio\: is\: 20\%\: .}}}}$