To calculate profitability ratios, we will need to use the following formulas:
1. Gross Profit Margin = (Revenue - Cost of Goods Sold) / Revenue
2. Net Profit Margin = Net Profit / Revenue
3. Return on Assets (ROA) = Net Profit / Total Assets
Given the information provided, we can calculate the Cost of Goods Sold (COGS) using the purchases and carriage inwards:
COGS = Purchases + Carriage Inwards
COGS = Rs. 2,000 + Rs. 5,000
COGS = Rs. 7,000
Next, we calculate the Gross Profit and Net Profit:
Gross Profit = Revenue - COGS
Gross Profit = Rs. 25,000 - Rs. 7,000
Gross Profit = Rs. 18,000
Net Profit = Gross Profit - (Salaries + Return Outwards + Wages)
Net Profit = Rs. 18,000 - (Rs. 0.15, 0 + Rs. 0.75, 0 + Rs. 0.1, 0)
Net Profit = Rs. 18,000 - Rs. 1,000
Net Profit = Rs. 17,000
Now, we can calculate the profitability ratios:
1. Gross Profit Margin = (Rs. 18,000) / Rs. 25,000 * 100
Gross Profit Margin = 72%
2. Net Profit Margin = (Rs. 17,000) / Rs. 25,000 * 100
Net Profit Margin = 68%
3. Total Assets = Rs. 25,000 (since no information is provided about any other asset)
Return on Assets (ROA) = Rs. 17,000 / Rs. 25,000 * 100
Return on Assets (ROA) = 68%
Therefore, the profitability ratios for the year 2021-22 are:
1. Gross Profit Margin = 72%
2. Net Profit Margin = 68%
3. Return on Assets (ROA) = 68%
Following information is available for the year 2021-22, calculate profitability ratios:
Rs * 0.25, 0
Rs * 0.75, 0
Rs * 0.15, 0
Rs * 0.6, 0
Rs * 0.2, 0
Rs * 0.25, 0
Rs * 0.1, 0
Rs. 2,000
Rs. 5,000
Revenue from Operations: Cash
Purchases: Cash
Credit
Carriage Inwards
Salaries
Decrease in Inventory
Return Outwards
Wages
Credit
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