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Gross profit ratio of a company was 25%....

Gross profit ratio of a company was `25%`. Its credit revenue from operations was Rs. 20,00,000 and its cash revenue from operations was `10% ` of the total revenue from operations. If the indirect expenses of the company were Rs. 50,000, calculate its net profit ratio.

Text Solution

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Cash Revenue from Operations = Rs. `20,00,000xx10//90`
= Rs.2,22,222
Hence, total Revenue from Operations are = Rs.22,22,222
Gross profit `=0.25xx22,22,222` = Rs. 5,55,555
Net profit = Rs.5,55,555 – 50,000
= Rs.5,05,555
Net profit ratio = Net profit/Revenue from Operations `xx100`
= Rs.5,05,555/Rs.22,22,222 `xx100`
`= 22.75%`.
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Knowledge Check

  • A firm's credit revenue from operations is Rs. 3,60,000, cash revenue from operations is Rs. 70,000. Cost of revenue from operations is Rs. 3,61,200. Its gross profit ratio will be :

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