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 ₹ 2,00,000 ₹ 5,00,000 = 40% (b) Net Profit Ratio = ₹ 80,000 X ₹ 9,00,000 ₹ 5,00,000 = 16% (c) Operating Ratio = ₹ 4,22,000 X 100 ₹ 5,00,000 = 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

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