Gorss Profit Ratio.

1.	Gorss Profit Ratio.
Answer» This ratio discloses the relation between gross profit and total net sales. We can know that how much precentage of gross profit we earn on sales. Gross Profit Ratio = \(\frac{ Gross \,Profit}{ Total\, Net \,Sales } × 100\) Gross Profit = Net sales – Cost of goods sold Net Sales = Total sales – Sale return Total Sales = Total cash sales + Total credit sales Cost of goods sold = Cost of goods consumed + Wages + Factory expenses Cost of goods consumed = Opening stock of raw material + Purchase of raw material + Purchase expenses – Closing stock of raw material Cost of goods sold = Sales – Gross profit OR Sales + Gross loss On the basis of gross profit ratio, gross profitability of a unit can be determined. This is income based ratio so its increasing trend indicates enhancement ¡n profitability

Answer»

This ratio discloses the relation between gross profit and total net sales. We can know that how much precentage of gross profit we earn on sales.
Gross Profit Ratio = \(\frac{ Gross \,Profit}{ Total\, Net \,Sales } × 100\)

Gross Profit = Net sales – Cost of goods sold
Net Sales = Total sales – Sale return
Total Sales = Total cash sales + Total credit sales
Cost of goods sold = Cost of goods consumed + Wages + Factory expenses
Cost of goods consumed = Opening stock of raw material + Purchase of raw material + Purchase expenses – Closing stock of raw material
Cost of goods sold = Sales – Gross profit OR Sales + Gross loss
On the basis of gross profit ratio, gross profitability of a unit can be determined.
This is income based ratio so its increasing trend indicates enhancement ¡n profitability

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Gorss Profit Ratio.

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