Question 75 Chapter 4 of +2-B - USHA Publication 12 Class

Question 75 Chapter 4 of +2-B

75. (GP Ratio/Operating NP Ratio/NP Ratio) From the following income statement of Modi Chemicals, compute (a) Gross profit ratio (b) Operating net profit ratio and (c) Net profit ratio. Ignore taxation.

Statement of Profit And Loss

Particulars		Amount ₹
Revenue from Operations (Sales)		8,43,500
Add Other Income
Profit on Sale of Car	20,000
Interest on Investment	40,000	60,000
Total Revenue		9,03,500
Less : Expenses
Purchases	4,65,000
Changes in Inventories (Opening Inventory — Closing Inventory) (₹ 30,500 - ₹ 55,000)	-24,500
Depreciation	16,000
Factory Expenses	1,43,000
Office Expenses	50,000
Selling Expenses	30,000
Distribution Expenses	20,000
Provision for Doubtful Debts	4,000
Interest on Debenture	14,000
Loss of Cash by Theft	6,000	7,23,500
Net Profit		1,80,000

The solution of Question 75 Chapter 4 of +2-B: - 

(a) Operating Profit Ratio	=	₹ 2,60,000	X	100
		₹ 8,43,500
	=	30.82%
(b) Net Profit Ratio	=	₹ 1,40,000	X	100
		₹ 8,43,500
	=	16.60%
(c) Operating Ratio	=	₹ 1,80,000	X	100
		₹ 8,43,500
	=	21.34%

Cost of goods sold	=	Opening Stock + Purchases + Factory Expenses – Closing Stock
	=	₹ 30,500 + ₹ 4,65,000 + ₹ 1,43,000 - ₹ 55,000
	=	₹ 5,83,500
Operating Net profit	=	Net profit + Non operating expenses* – Non-operating incomes**
	=	₹ 1,80,000 + 20,000 - ₹ 40,000
	=	₹ 1,40,000
Gross Profit	=	Sales - Cost of goods sold
	=	₹ 8,43,500 - ₹ 5,83,500
	=	₹ 2,60,000

 

*Non operating expenses	=	Loss of Cash by Theft + Interest on Debentures
	=	₹ 6,000 + ₹ 14,000
	=	₹ 20,000
**Non operating incomes	=	Profit on sale of Car + Interest on Investment
	=	₹ 20,000 + ₹ 40,000
	=	₹ 60,000