Practicing Success

Target Exam

CUET

Subject

Accountancy

Chapter

Accounting Ratios

Question:

Calculate the net profit from the following information-

Sales ₹2000000
Gross profit ratio 30%
Operating ratio 80%
Non-operating expenses ₹30000
Non-operating income ₹50000
Options:

₹300000

₹350000

₹400000

₹420000

Correct Answer:

₹420000

Explanation:

Net profit = operating profit - non-operating expenses + non-operating income
               = 400000 - 30000 + 50000
               = ₹420000

* Operating profit= Sales X operating profit ratio
                       = 2000000 X 20/100
                       = ₹400000

*Operating Profit Ratio = 100 – Operating Ratio
                               = 100 - 80
                                = 20%