From the following statement of profit and loss for the year ended 31st March ,2019 of Reynolds Ltd.

Calculate (i) Gross Profit Ratio,(ii) Operating Profit Ratio,(iii) Operating Ratio, ( iv) Expenses Ratio, (v) Net Profit Ratio.

Explanation

Gross Profit Ratio`= ("Gross Profit")/("Revenue from Operations ")xx100= ("₹ 4,20,000")/("₹ 8,00,000")xx100 = 52.5%,`
Gross Profit =Revenue from Operations - Cost of Revenue from Opreations
=₹ 8,00,000- ₹ 3,80,000= ₹ 4,20,000.
Cost of Revenue from Operations
=Puchases of stock -in -trade + Change in Investment of stock -in -Trade
= ₹ 4,20,000- ₹ 40,000= ₹ 38,00,000.
Note: It is assumed that there are no direct expenses.
(ii) Operating Profit Ratio `= ("Operating profit")/("Revenue from operations")xx100=(" ₹ 2,80,000")/("8,00,000")xx100=35%`
Operating Profit =Net profit + Non - operations Expenses-Non - operating Income
= ₹ 2,81,200 + ₹ 3,400- ₹ 4,600= ₹ 2,80,000.
Operating Ratio
`=(" Cost of Revenue from Operations ( Cost of Goods Sold ) + Operating Expenses ")/(" Revenue from Operations (Net sales)")xx100`
`=( "₹ 3,80,000 + ₹ 1,40,000")/(" ₹ 8,00,000")xx100`= 65 %
Operating Expenses = Employes Benfit Expenses + Office Expenses + Selling and Distribution Expenses
= ₹ 28,000 + ₹ 48,000 + ₹ 64,000= ₹ 1,40,000.
(iv) Expenes Ratio
(a) Employees Benefit Expeses Ratio`=("Employees Benefit Expenses")/(" Revenue from Operations ")xx100`
`=(" ₹ 28,000 ")/(" 8,00,000")xx100`=3.5 %
(b) Other Expenses Ratio `=("Other Expenses ")/("Revenus from Operations ")xx100 = ("₹ 1,12,000")/(" ₹ 8,00,000 ")xx100 =14%`
Other Expenses =Office Expenses + Selling and Distribution Expenses
= ₹ 48,000 + ₹ 64,000 = ₹ 1,12,000.
(c ) Office Expenses Ratio `=("Office Expenses ")/("Revenue from Operations ") xx 100 = (" ₹ 48 ,000")/(" ₹ 8,00,000")xx100= 6 %`
( d) Selling and Distribution Expenses Ratio
`=("Selling and Distribution Expenses ")/("Revenue from Operations ")xx100=("₹ 64,000")/("8,00,000")xx100= 8%`
(e ) Non - operating Expenses Ratio
`=("Non - operating Expenses Ratio ")/("Revenue from Opetations ")xx100=(" ₹ 3,400")/(" ₹ 8,00,000")xx100=0.425 %`
(v ) Net Profit Ratio `=("Net Profit ")/("Revenue from Operations ")xx100=(" ₹ 2,81,200")/("8,00,000")xx100=35.15 %`