Question

Following is the Trading and Profit & Loss Account of a company for the year ended 31st March, 2025:

Particulars	Amount (Rs.)	Particulars	Amount (Rs.)
To Stock	63,000	By Sales	3,00,000
To Purchases	2,36,000	By Stock at end	1,50,000
To Wages	4,000
To Gross Profit c/d	1,47,000
Total	4,50,000	Total	4,50,000
To Administrative Exp.	4,000	By Gross Profit b/d	1,47,000
To Selling & Distribution Exp.	5,000
To Loss on sale of plant	3,000
To Net Profit	1,35,000
Total	1,47,000	Total	1,47,000

Calculate Gross Profit Ratio and Net Profit Ratio.

Hint:

Gross Profit Ratio = Gross Profit/Net Sales × 100; Net Profit Ratio = Net Profit/Net Sales × 100.

Answer 1

Step 1: Reconstruct Gross Profit and Net Profit from the trading activity directly, as a cross-check:
Gross Profit = Sales + Closing Stock − Opening Stock − Purchases − Wages = 3,00,000 + 1,50,000 − 63,000 − 2,36,000 − 4,000 = Rs. 1,47,000, matching the account balance.

Step 2: Reconstruct Net Profit as a cross-check:
Net Profit = Gross Profit − (Administrative Exp. + Selling & Distribution Exp. + Loss on sale of plant) = 1,47,000 − (4,000+5,000+3,000) = 1,47,000 − 12,000 = Rs. 1,35,000, again matching.

Step 3: Express both as a percentage of sales, converting to a per-Rs.-100-of-sales view:
For every Rs. 100 of sales, gross profit earned = (1,47,000/3,00,000)×100 = Rs. 49, and net profit earned after all operating expenses/losses = (1,35,000/3,00,000)×100 = Rs. 45.

Final Answer:
Gross Profit Ratio = \[ \boxed{49\%} \] and Net Profit Ratio = \[ \boxed{45\%} \] of sales, both figures independently verified by reconstructing the profit figures from the underlying trading data.