Question

If the gross profit ratio for year 2017, 2018 and 2019 is 20%, 25% and 30%respectively, then average gross profit ratio will be____ *

30%
25%
20%
None of the above​

Answer 1

Profitability Ratios

The ultimate aim for an entity at the end of the day is profit maximization. It is the goal that the whole organization works towards. And at the end of the financial year, we prepare final accounts that measure the profit for the year. But how to do we evaluate a company’s ability to earn such profit? We calculate the profitability ratios to asses the situation. Let us take a more detailed look.

Answer 2

Answer:

The average gross profit ratio will be 25 %.

Step-by-step explanation:

Step 1

The gross profit ratio for the year 2017 is 20%.

The gross profit ratio for the year 2018 is 25%.

The gross profit ratio for the year 2019 is 30%.

The average gross profit ratio= sum of all the ratios/Total number of ratios

                                                    = $\frac{20+25+30}{3}$

                                                    =$\frac{75}{3}$

                                                    =25

So, the average gross profit ratio will be 25%.