Based on following data related to Ambe limited, Jaipur, Answer question.
|
|
₹ |
|
Revenue from operations |
8,40,000 |
|
Cost of revenue from operations |
4,20,000 |
|
Selling Expenses |
80,000 |
|
Administrative Expenses |
40,000 |
|
Equity share capital |
1,00,000 |
|
8% preference share capital |
50,000 |
|
10% debentures |
1,00,000 |
|
Profit after Tax |
1,74,000 |
|
Tax Rate |
40% |
Determine Gross Profit Ratio.
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → 50%
Gross Profit = Revenue from operations − Cost of revenue from operations
Gross Profit = ₹8,40,000 − ₹4,20,000 = ₹4,20,000
Gross Profit Ratio = Gross Profit / Revenue from operations × 100
Gross Profit Ratio = 4,20,000 / 8,40,000 × 100 = 50%
Selling and administrative expenses are not deducted for gross profit; they enter the operating and net profit ratios.