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From the following calculate:
(a) Net Profit Ratio
(b)Operating Profit Ratio

Net Sales = 2,20,000
Gross Profit = 75,000
Office Expenses = 15,000
Selling Expenses = 26,000
Interest on Debentures = 5,000
Accidental Losses = 12,000
Income from rent = 2,500
Commission Received =2,000

Dear Student,
The solution to your query is provided below.
(a) Net Profit Ratio
Net Profit Ratio = Net ProfitNet Sales × 100

where,
Net Sales = Rs 2,20,000Net Profit = Gross Profit - (Operating and Non-Operating Expenses) + (Operating and Non-Operating Incomes)Non-Operating Expenses = Office Expenses + Selling Expenses + Interest on Debentures+ Accidental Lossesor, Non-Operating Expenses = 15,000 + 26,000 + 5,000 + 12,000 = Rs 58,000Non-Operaing Incomes = Income from Rent + Commission Receivedor, Non-Operaing Incomes = 2,500 + 2,000 = Rs 4,500Therefore,Net Profit = 75,000 - 58,000 + 4,500 = Rs 21,500


Net Profit Ratio = 21,5002,20,000 × 100 = 9.77%

(b) Operating Ratio
Operating Profit Ratio = Operating ProfitNet Sales × 100

where,
Net Sales = Rs 2,20,000
Gross Profit = Rs 75,000
Thus, Operating Profit = Gross Profit + Non-Operating Income - Non-Operating ExpensesNon-Operating Expenses = Office Expenses + Selling Expensesor, Non-Operating Expenses =15,000 + 26,000 = Rs 41,000Therefore, Operating Profit = 75,000 + 2,000 -41,000 = Rs 36,000


Operating Profit Ratio = 36,0002,20,000 × 100 =16.36%

Hope this answers your query.
Keep Posting!!!

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