Calculate P V ratio from information given below Sales 1 00 000 Profit 10 000 V C 70 per u...........

Finance (Phase -I & II) Analysis of Financial Statements

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Calculate P/V ratio from information given below:

Sales = 1,00,000/-

Profit =10,000/-

V.C. =70/- per unit

S.P. =100/- per unit.

70%

20%

30%

None of the above

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Explanation:

P/V ratio establishes the relationship between contribution and sales. It shows the amount of contribution per rupee of sales. It is also called contribution to sales ratio. It is measurement of the rate of change of profit due to change in volume of sales. Profit / Volume Ratio (P/V ratio) can be calculated as: Contribution per unit/ Selling Price per unit x 100.

In the given problem, P/V ratio = 30/100 (x) 100 = 30%