Calculate gross profit ratio form the following data :
Average inventory Rs 160000, inventroy trunovr Ratio 8 times, Average trade reveivables Rs 200000, Trade receivables turnover ratio 6 times, cash sales 25% of net sales.

Explanation

Gross profit ratio =`("gross profit")/("Revenue from operations")xx100=(Rs320000)/(Rs 1600000)xx10=20%`
Cost of revenue form operations (cost of goods sold)
=Average Inventroy `xx` Inventory turnopver ratio
`=Rs 160000xx8=Rs 1280000`
credit sales =Average trade receivables `xx` trade receivables turnover ratio
`=Rs 200000xx6=Rs1200000("being 75% of net sales")`
Revenue form opeartions(net sales)=credit sales `xx 100//75`
`=Rs 1200000xx100//75 =Rs 1600000`
Gross profit =Revenue from operation (net sales)-cost of revenue from
operation (cost of goods sold)
=Rs 1600000-Rs 1280000=Rs 320000