What will be the gross profit ratio of the company if total sales are ₹4,20,000, sales returns are ₹20,000, and the cost of goods sold ₹3,20,000?

20%

The correct answer is option 2- 20%.

Net revenue from operations = Revenue from operations - sales return
                                              = 4,20,000 - 20,000
                                             = ₹4,00,000

Gross profit = Net revenue from operations - Cost of revenue from operations
                   = 4,00,000-3,20,000
                   = ₹80,000

Gross Profit Ratio = Gross Profit/Net Revenue of Operations × 100
                              = ( 80,000/4,00,000) x 100
                              = 20%