From the following information calculate gross profit ratio:-
Credit Sales. 5,00,000
Purchases. 3,00,000
Carriage Inwards. 10,000
Decrease in Inventory. 10,000
Returns Outwards 10,000
Wages. 50,000
Rate of credit sales to cash sales. 4:1

Calculation of Gross Profit Ratio:

Credit Sale = Rs 5,00,000
Rate of Cash Sale to Credit Sale = 1:4*
  

Total Sales = Cash Sales + Credit Sales = Rs 1,25,000 + Rs 5,00,000 = Rs 6,25,000

Cost of Goods Sold = Purchases – Return Outward + Carriage Inwards + Wages + Decrease in Inventory
  = Rs 3,00,000 – Rs 10,000 + Rs 10,000 + Rs 50,000 + Rs 10,000
  = Rs 3,60,000

Gross Profit = Total Sales – Cost of Goods Sold
   = Rs 6,25,000 – Rs 3,60,000 = Rs 2,65,000

Note: As per the Text Book the ratio of Cash Sale to Credit Sale is 4:1 but with this ratio the answer cannot be derived. Therefore, it has been taken as 1:4

Regards.