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✦ FREE LEARNING — CLASS 11 & 12 — CBSE · PSEB — ACCOUNTS · ECONOMICS · BST ✦
Calculate Gross Profit Ratio from the following data: Average Inventory ₹3,20,000; Inventory Turnover Ratio 8 times; Average Trade Receivables ₹4,00,000; Trade Receivables Turnover Ratio 6 times; Cash Sales 25% of Net Sales.
Cost of Goods Sold = Average Inventory × Inventory Turnover Ratio = 3,20,000 × 8 = ₹25,60,000
Net Credit Sales = Trade Receivables Turnover Ratio × Average Trade Receivables = 6 × 4,00,000 = ₹24,00,000
Since Cash Sales = 25% of Total Sales, Credit Sales = 75% of Total Sales.
75% of Total Sales = 24,00,000
Total Sales = 24,00,000 ÷ 0.75 = ₹32,00,000
Gross Profit = Total Sales − Cost of Goods Sold = 32,00,000 − 25,60,000 = ₹6,40,000
Gross Profit Ratio = Gross Profit ÷ Net Sales × 100 = 6,40,000 ÷ 32,00,000 × 100 = 20%
Accounting & Commerce Educator
Sarbjit Singh holds a B.Com and M.Com degree and has over 12 years of teaching experience in double entry bookkeeping, financial accounting, and business studies.
This guide covers "T.S. Grewal Class 12 Vol 3 Chapter 4 Q.142 - Accounting Ratios", focusing on key definitions, step-by-step concepts, applications, and revision guidelines relevant to Chapter 4 - Accounting Ratios.
It is primarily curated for Class 11 and Class 12 high school commerce, accounting, and economics students, as well as aspirants preparing for board exams or CA Foundation.
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