141 :- A trader carries an Average Inventory of Rs 1,00,000. His Inventory Turnover Ratio is 8 Times. He sells goods at a profit of 25% of cost. Calculate Gross Profit Ratio.
Solution :-
Inventory Turnover Ratio = Cost of Goods Sold/Average Inventory
8 = Cost of Goods Sold/1,00,000
Cost of Goods Sold = Rs 8,00,000
Revenue from Operation = Cost of Goods Sold + 25/100 x Cost of Goods Sold
= 8,00,000 + 2,00,000
= Rs 10,00,000
Gross Profit = Revenue from Operation – Cost of Goods Sold
= 10,00,000 – 8,00,000
= Rs 2,00,000
Gross Profit Ratio = Gross Profit/Revenue from Operation x 100
= 2,00,000/10,00,000 x 100
= 20%