Question : What will be the gross profit ratio:
If Credit Revenue from Operations is Rs.7,00,000, Cash Revenue from Operations is Rs.1,00,000. The cost of Revenue from Operations is Rs.6,40,000.
Option 1: 30%
Option 2: 10%
Option 3: 25%
Option 4: 20%
Correct Answer: 20%
Solution :
Total revenue: Credit Revenue from Operations + Cash Revenue from Operations
Total revenue : 7,00,000 + 1,00,000 = 8,00,000
Gross Profit = Total revenue - Cost of Revenue from Operations = 8,00,000-6,40,000 = 1,60,000
Gross Profit Ratio = Gross profit/Total revenue = 1,60,000/8,00,000 = 20%
Hence option 4 is the correct answer.