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Question
From the following details of a business concern calculate net profit ratio.
| Particulars | Amount Rs. |
| Revenue from operations | 9,60,000 |
| Cost of revenue from operations | 5,50,000 |
| Office and administration expenses | 1,45,000 |
| Selling and distribution expenses | 25,000 |
Solution
Net Profit Ratio = `"Net Profit"/"Revenue from operations" xx 100`
Gross profit = Revenue from operations – Cost of revenue from operation
= 9,60,000 - 5,50,000 = Rs. 4,10,000
Operating Profit = Gross Profit – Operating Exps
Operating Exps = Office & Administrative Exps + Selling & Distribution Exps
= 1,45,000 + 25,000 = Rs. 1,70,000
Operating Profit = 4,10,000 – 1,70,000
Operating Profit = Rs. 2,40,000
Net Profit ratio = `240000/960000 xx 100` = 25%
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