Question

Gross profit of company is 25% of Cost of Revenue from Operations. Its credit Revenue from Operations are twice its Cash Revenue From Operations. If credit Revenue from Operations are Rs.4,00,000, Calculate GP Ratio.

Answer 1

Explanation:

Solution :

Gross profit of company is 25% of Cost of Revenue from Operations.

As per the Question :

If credit Revenue from Operations are Rs.4,00,000

Its credit Revenue from Operations are twice its Cash Revenue From Operations

Revenue from Operations = credit Revenue from Operations + Cash Revenue From Operations

4,00,000 + 4,00,000/2

4,00,000 + 2,00,000

Revenue from Operations = Rs. 6,00,000

Revenue from Operations = Cost of Revenue from Operations + Gross Profit

Assume,

Cost of Revenue from Operations = x

6,00,000 = x + 25% of x

6,00,000 = x + 25/100 × x

6,00,000 = x + 25x/100

6,00,000 = (100x + 25x)/100

6,00,000 = 125x/100

6,00,000 × 100 = 125x

6,00,00,000 = 125x

x = 4,80,000

Cost of Revenue from Operations = 4,80,000

Gross Profit = 4,80,000 × 25/100

Gross Profit = 1,20,000

Gross profit Ratio = Gross Profit / Revenue from Operations × 100

Gross profit Ratio = 1,20,000 / 6,00,000 × 100

Gross profit Ratio = 20%

Hence, Gross profit Ratio = 20%

Answer 2

Answer:

The Gross Profit ratio is 20%

Explanation:

Gross profit of company = 25% of Cost of Revenue from operations.

Credit Revenue from Operations = Rs. 4,00,000

The questions says, Credit Revenue from operations is two times its Cash Revenue from operations.

$\boxed{\textsf{Revenue from operations = Credit Revenue from operations + Cash Revenue from operations}}$

$\sf{\longrightarrow}\:Revenue\:from\:operations\:=\:4,00,000 +\dfrac{4,00,000}{2}$

$\sf{\longrightarrow}\:Revenue\:from\:operations\:=\:4,00,000 +2,00,000$

$\sf{\longrightarrow}\:Revenue\:from\:operations\:=\:6,00,000$

Revenue from Operations is Rs. 6,00,000

_____________________________________

$\boxed{\textsf{Revenue from operations = Cost of Revenue from operations + Gross Profit}}$

Consider the cost of revenue from operations as y

$\sf{\longrightarrow}\:6,00,000 = y + 25 \%\:of\:y}$

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

$\sf{\longrightarrow}\:6,00,000=y+0.25y}$

$\sf{\longrightarrow}\:6,00,000=1.25y}$

$\sf{\longrightarrow}\:y=\dfrac{6,00,000}{1.25}}$

$\sf{\longrightarrow}\:y=4,80,000}$

Cost of Revenue from Operations is Rs. 4,80,000

_____________________________________

$\boxed{\textsf{Gross Profit\:=\:Revenue from operations\:--\:Cost of Revenue from operations}}$

$\sf{\longrightarrow}\:Gross\:Profit\:=\:6,00,000\:-\:4,80,000}$

$\sf{\longrightarrow}\:Gross\:Profit\:=\:1,20,000}$

Gross Profit is Rs. 1,20,000

_____________________________________

$\boxed{\sf{Gross\:profit\:Ratio = \dfrac{Gross\:Profit}{Revenue\:from\:operations} \times 100}}$

$\sf{\longrightarrow}\:{Gross\:profit\:Ratio = \dfrac{1,20,000}{6,00,000} \times 100}$

$\sf{\longrightarrow}\:{Gross\:profit\:Ratio = \dfrac{12}{60} \times 100}$

$\sf{\longrightarrow}\:{Gross\:profit\:Ratio = 2 \times 10}$

$\sf{\longrightarrow}\:{Gross\:profit\:Ratio = 20 \%}$

  Gross profit Ratio is 20%

Therefore, the Gross Profit ratio is 20%