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.

Explanation

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%`.