What is Gross Profit Ratio if?
Total sales Rs. 6,00,000
Sales returns Rs. 50,000
Cost of goods sold Rs. 4,40,000
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → 20%
Gross Profit Ratio = Gross Profit ÷ Net Revenue from Operations × 100, and gross profit is net revenue less the cost of goods sold.
Net Revenue from Operations = Rs. 6,00,000 − Rs. 50,000 = Rs. 5,50,000
Gross Profit = Rs. 5,50,000 − Rs. 4,40,000 = Rs. 1,10,000
Gross Profit Ratio = Rs. 1,10,000 ÷ Rs. 5,50,000 × 100
Gross Profit Ratio = 20%
The ratio is worked on net revenue from operations, that is, after deducting sales returns; dividing by the total sales of Rs. 6,00,000 would understate it.
NCERT (2026-27 edition): |