Question 69 Chapter 4 of +2-B

Question 69 Chapter 4 of +2-B

IV. Profitability Ratios

69. (GP Ratio/NP Ratio/Stock T/O Ratio/Reasons for Variation in two years) The following is the statement of profit and loss of a Trader for the year ended 31st March 2019 with the corresponding figures for the previous year.

Particulars 2018 2019
   
Revenue from Operations (Sales) 6,00,000 7,48,000
Less : Purchase 4,80,000 5,84,000 
Changes in Inventories -8,000 12,000 
(Opening Inventory — Closing Inventory)    
2018 (₹ 1,25,000 —₹ 1,33,000)     
2019 (₹ 1,33,000 — ₹ 1,21,000)    
Administrative Expenses38,000 38,000 
Selling Expenses22,500 29,290 
Other Expenses37,500 46,710 
Interest – – – –5,70,0004,0007,14,000
Net Profit  30,000 34,000

Calculate the following ratios for both the years and indicate the possible reasons for variation of the ratios of the two years (1) Gross profit ratio (2) Net profit ratio (3) Stock turnover ratio.

The solution of Question 69 Chapter 4 of +2-B: – 

 

(1) Gross Profit Ratio=₹ 1,28,000X₹ 2,00,000
₹ 6,00,000
 =21.33%  
(2) Net Profit Ratio=₹ 30,000X8,00,000
₹ 6,00,000
 =5%  
     
Net Profit=Gross Profit – Indirect Expenses  
 =₹ 2,00,000 – ₹ 40,000  
 =₹ 1,60,000  
(3) Stock Turnover Ratio=Cost of goods sold
Average Inventory
   
Cost of goods sold=Opening Inventory – Closing Inventory + Purchase
 =(₹ 8,000) + ₹ 4,80,000
 =₹ 4,72,000
Average Inventory=Opening Inventory + Closing Inventory
2
   
 =₹ 1,25,000 + ₹ 1,33,000
 2
 =₹ 1,29,000
   
Stock Turnover Ratio=₹ 4,72,000
₹ 1,29,000
 =3.66 Times

 

(1) Gross Profit Ratio=₹ 1,52,000X₹ 2,00,000
₹ 7,48,000
 =20.32%  
(2) Net Profit Ratio=₹ 34,000X8,00,000
₹ 7,48,000
 =4.54%  
(3) Stock Turnover Ratio=Cost of goods sold
Average Inventory
   
Cost of goods sold=Opening Inventory – Closing Inventory + Purchase
 =₹ 12,000 + ₹ 5,84,000
 =₹ 5,96,000
Average Inventory=Opening Inventory + Closing Inventory
2
   
 =₹ 1,33,000 + ₹ 1,21,000
 2
 =₹ 1,27,000
   
Stock Turnover Ratio=₹ 5,96,000
₹ 1,27,000
 =4.69 Times

Reason: Gross Profit Ratio and Net Profit Ratio both are decreased in 2019 from the previous year. This happened due to an increase in the cost of goods sold in 2019 like the percentage of sales and expenses are also increase.



Also, Check out the solved question of previous Chapters: –

Usha Publication – Accountancy PSEB (Class 12) – Volume I – Solution

Usha Publication – Accountancy PSEB (Class 12) – Volume II – Solution

Check out T.S. Grewal +2 Book 2020@ Official Website of Sultan Chand Publication

2 Book 3 min 225x300 - Question 69 Chapter 4 of +2-B  - USHA Publication  12 Class
T.S. Grewal’s Analysis of Financial Statements

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