Question 156:
What will be the Operating Profit Ratio, if Operating Ratio is 82.59%?
Answer:
Operating Ratio = 82.59%
Operating Ratio + Operating Profit Ratio = 100%
Operating Profit Ratio = 100% − 82.59% = 17.41%
Question 157:
Calculate Operating Profit Ratio, in each of the following alternative
cases:
Case 1: Revenue from Operations (Net Sales) `
20,00,000; Operating Profit ` 3,00,000.
Case 2: Revenue from Operations (Net Sales) `
6,00,000; Operating Cost ` 5,10,000.
Case 4: Revenue from Operations (Net Sales) `
3,60,000; Gross Profit 20% on Sales; Operating Expenses `
18,000
Case 4: Revenue from Operations (Net Sales)
`
4,50,000; Cost of Revenue from Operations
`
3,60,000; Operating Expenses ` 22,500.
Case 5: Cost of Goods Sold, i.e., Cost of Revenue from
Operations ` 4,00,000; Gross
Profit 20% on Sales; Operating Expenses
` 25,000.
Answer:
Case 1
Operating Ratio= Operating Cost/ Net Sales ×100
=3,00,000/20,00,000× 100=15%
Case II
Operating Profit = Net Sales- Operating Cost
=6,00,000-5,10,000
=90,000
Operating Ratio= Operating Cost/ Net Sales ×100
=90,000/6,00,000× 100=15%
Case III
Net Sales = 3,60,000
Gross Profit = 20% on Sales
Gross Profit =20/100×3,60,000=72,000
Operating Profit = Net Sales- Operating Cost
=72,000-18,000
=54,000
Operating Ratio= Operating Cost/ Net Sales ×100
=54,000/3,60,000× 100=15%
Case IV
Net Sales = 4,50,000
Operating Profit = Net Sales- Cost of goods sold-Operation expenses
=4,50,000-3,60,000-22,500
=67,500
Operating Ratio= Operating Cost/ Net Sales ×100
=67,500/4,50,000× 100=15%
Case V
Gross profit = 20% on sales
Let Sales =x
Gross profit=x×20/100=20x/100
Sales = Cost Goods Sold + Gross Profit
x=4,00000+20x/100
Or, 80x/100=4,00,000
Or, x=5,00,000
∴Sales = 5,00,000
Operating Cost = Cost of Goods Sold+ Operating Expenses
=4,00,000+25,000=4,25,000
Operating Profit = Net Sales- Cost of goods sold-Operation expenses
=5,00,000-4,00,000-25,000
=75,000
Operating Profit Ratio = Operating Profit/ Net Sales×100
=75,000×100/5,00,000=15%
Question 158:
Operating Profit Ratio of star Ltd. is 20%. State, giving reason, which of the following transactions will
(a) Increase (b) Decrease, or (c) not alter the Operation Profit Ratio
(a) Purchases of Stock-in-trade `1,00,000
(b) Purchases Return `20,000
(c) Revenue from operation on sale of Stock-in-trade `1,25,000.
(d) Stock-in-trade Costing `25,000 withdrawn for personal use.
Assuming that operating cost is variable, i.e., varies from operations.
Answers;
Transactions |
Effect |
Reason |
(a) |
No Change |
Both purchases and closing inventory will increase and hence Cost of Revenue from Operations win remain unchanged.
|
(b) |
No Change |
Both purchases and closing inventory wiu decrease and hence Cost of Revenue from Operations will remain unchanged.
|
(c) |
No Change |
Revenue from Operations will increase but closing inventory will decrease by the same percentage (not by the same amount). Therefore, Cost of Revenue from Operations will increase by the same percentage as the Revenue from Operations increase.
|
(d) |
No Change |
Both purchases and dosing inventory will decrease and hence Cost of Revenue from Operations will remain unchanged.
|
Net Profit Ratio
Question 159:
Cash Sales ` 2,20,000; Credit Sales ` 3,00,000; Sales Return ` 20,000; Gross Profit ` 1,00,000; Operating Expenses ` 25,000; Non-operating incomes ` 30,000; Non-operating Expenses ` 5,000. Calculate Net Profit Ratio.
Answer:
Net Sales= Cash Sales + Credit Sales - Sales Return
= 2,20,000+3,00,000-20,000
= 5,00,000
Net Profit = Gross Profit - Operating Expenses - Non-operating Expenses + Non-operating incomes
= 1,00,000-25,000-5,000+30,000
= 1,00,000
Net Profit Ratio= Net profit ×100/Net Sales
= 1,00,000×100/5,00,000
= 20%
Question 160:
Revenue from Operations, i.e., Net Sales ` 12,00,000; Net Profit ` 1,20,000. Calculate Net Profit Ration.
Answer:
Net Profit Ratio=Net Profit/Net Sales×100
=12,00,000/1,20,000×100
=10%
Ts Grewal Solution 2023-2024
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Class 12 / Volume – I
Chapter 3 – Accounting Ratio