142 :- Calculate Gross Profit Ratio from the following data:
Average Inventory Rs 3,20,000; Inventory Turnover Ratio is 8 Times; Average Trade Receivables Rs 4,00,000; Trade Receivables Turnover Ratio is 6 Times. Cash Sales 25% of Net Sales.
Solution :-
Inventory Turnover Ratio = Cost of Goods Sold/Average Inventory
8 = Cost of Goods Sold/3,20,000
Cost of Goods Sold = 3,20,000 x 8
= Rs 25,60,000
Trade Receivable Turnover Ratio = Net Credit Revenue from Operation/Average Trade Receivables
6 = Net Credit Revenue from Operations/4,00,000
Net Credit Revenue from Operations = 4,00,000 x 6
= Rs 24,00,000
Revenue from Operation = Net Credit Revenue from Operation + Cash Revenue from Operations
x = 24,00,000 + 25x/100
75x/100 = 24,00,000
x = 24,00,000/75 x 100
x = Rs 32,00,000 (Revenue from Operation)
Gross Profit = Revenue from Operation – Cost of Goods Sold
= 32,00,000 – 25,60,000
= Rs 6,40,000
Gross Profit Ratio = Gross Profit/Revenue from Operations x 100
= 6,40,000/32,00,000 x 100
= 20%