Consider the following information Rate of gross profit 25 on cost of goods sold Sales ndash Rs 20 0...........

General Accounting Principles Ratio analysis

Consider the following information:

Rate of gross profit-25% on cost of goods sold Sales – Rs 20,00,000

Which one of the following is the amount of GrossProfit?

Rs. 5,00,000

Rs. 6,25,000

Rs. 3,75,000

Rs. 4,00,000

Cost + Gross Profit=Sales

Assuming the cost is 100, than gross profit becomes 25

Hence,

100+25= Sales i.e. 20,00,000

therefore

20,00,000/125*25= Rs.4,00,000/-

Gross profit will be Rs.4,00,000

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