Question 76 Chapter 4 of +2-B - USHA Publication 12 Class

Question 76 Chapter 4 of +2-B

IV. Profitability Ratios

76. (GP Ratio/NP Ratio/ Operating Ratio) The following is the profit and loss account of Wye Limited for the year ended on 31st March, 2018

Particulars		Amount ₹
Revenue from Operations (Sales)		5,00,000
Add Other Income
Dividend Received		5,000
Total Revenue		5,05,000
Less : Expenses
Purchases	3,00,000
Change in Inventories	-20,000
(Opening Inventory- Closing Inventory)
(₹ 70,000 – ₹ 90,000)
Carriage Inward	6,000
Wages	14,000
Administrative Expenses	1,02,000
Selling & Distribution System	20,000
Interest	3,000	4,25,000
Net Profit		80,000

You are required to calculate : (a) Gross profit ratio (b) Net profit ratio (c) Operating ratio.

The solution of Question 76 Chapter 4 of +2-B: –

(a) Operating Profit Ratio	=	₹ 2,00,000	X	100
(a) Operating Profit Ratio	=	₹ 5,00,000	X	100
	=	40%
(b) Net Profit Ratio	=	₹ 80,000	X	100
	=	₹ 5,00,000	X	100
	=	16%

(c) Operating Ratio	=	₹ 4,22,000	X	100
	=	₹ 5,00,000	X	100

	=	84.4%

Cost of goods sold	=	Opening Stock + Purchases + Factory Expenses – Closing Stock
	=	₹ 70,000 + ₹ 3,00,000 + ₹ 6,000 + ₹ 14,000 – ₹ 90,000
	=	₹ 3,00,000
Operating cost	=	Cost of goods sold + Administrative Expenses + Selling and Distribution expenses
	=	₹ 3,00,000 – ₹ 1,02,000 + ₹ 20,000
	=	₹ 4,22,000
Gross Profit	=	Sales – Cost of goods sold
	=	₹ 5,00,000 – ₹ 3,00,000
	=	₹ 2,00,000

End of Solution

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