Question

Q5: Solve any one from the following ( Analysis of Financial statement / Death of Partner)
Calculate the Gross Profit Ratio , Gross profit, Net sales & COGS
Sales ` 5,40,000, Net purchase ` 3,00,000
Sales Return ` 40,000 Closing stock ` 50,000
Opening stock ` 90,000

Answer 1

Answer:

COGS = 3,40,000

GP = 1,60,000

Profit margin = 32%

Net sale = 5,00,000

Explanation:

Given:

1. Opening stock = 90,000
2. Closing stock = 50,000
3. Net purchase = 3,00,000
4. Net sale = 5,00,000 [ 5,40,000 - 40,000 ]

To find:

1. Gross profit
2. Net sale
3. Cost of goods sold
4. Gross profit margin

Equation used:

1. COGS = Opening stock + Purchase - Closing stock
2. Net sale = Total sale - Returns
3. Gross profit margin = [(Revenue - COGS) ÷ Revenue] × 100

Solution:

Calculation of COGS

1. Opening stock = 90,000
2. Purchase = 3,00,000
3. Closing stock = 50,000

COGS = Opening stock + Purchase - Closing stock

COGS = 90,000 + 3,00,000 - 50,000

COGS = 3,40,000

Calculation of Gross profit

• Opening stock = 90,000

• Closing stock = 50,000

• Net purchase = 3,00,000

• Net sale = 5,00,000 [ 5,40,000 - 40,000 ]

GP = Sale + Closing stock - Opening stock - Purchase

GP = 5,00,000 + 50,000 - 3,00,000 - 90,000

GP = 1,60,000

Gross profit Margin:

Profit margin =  [(Revenue - COGS) ÷ Revenue] × 100

Profit margin = [(5,00,000 - 3,40,000) ÷ 5,00,000] × 100

Profit margin = 1,60,000 ÷ 5,00,000

Profit margin = 0.32 × 100

Profit margin = 32%