Gross Profit Ratio for a firm remains same but the net profit ratio is decreasing. The reason for such behavior could be _________.

Increase in Costs of Goods Sold

No worries! We‘ve got your back. Try BYJU‘S free classes today!

Increase in Expense

Right on! Give the BNAT exam to get a 100% scholarship for BYJUS courses

Increase in Dividend

No worries! We‘ve got your back. Try BYJU‘S free classes today!

Decrease in Sales

No worries! We‘ve got your back. Try BYJU‘S free classes today!

Open in App

Solution

The correct option is A Increase in Expense
Gross profit ratio is a profitability ratio that shows the relationship between gross profit and total net sales revenue. It is a popular tool to evaluate the operational performance of the business. The net profit percentage is the ratio of after-tax profit to net sales.

Suggest Corrections

Similar questions

Q. A trading firm’s average stock is Rs. 20,000 (cost). If the stock turnover ratio is 8 times and the firm sells goods at a profit of 20% on sales, ascertain the profit of the firm.

Q. Gross Profit Ratio of a company is 25%. State giving reason, which of the following transactions will (a) increase or (b) decrease or (c) not alter the Gross Profit Ratio.
(i) Purchases of Stock-in-Trade ₹50,000.
(ii) Purchases Return ₹15,000.
(iii) Cash Sale of Stock-in-Trade ₹40,000.
(iv) Stock-in-Trade costing ₹20,000 withdrawn for personal use.
(v) Stock-in-Trade costing ₹15,000 distributed as free sample.

A trading firm’s average inventory is Rs 20,000 (cost). If the inventory turnover ratio is 8 times and the firm sells goods at a profit of 20% on sale, ascertain the profit of the firm.

Q. A & B enter into a joint venture sharing profit & losses in the ratio of

2 : 1

. A purchased goods costing Rs

2, 00, 000

. B sold the goods for

R s .2, 50, 000

. A is entitled to get

1 %

commission on purchase and B is entitled to get

5 %

commission on sales. The profit on venture will be :

Q. A firm has Capital of 10,60,000; Sales of 5,00,000; Gross Profit of 2,00,000 and Expenses of 1,00,000. What is the Net Profit Ratio?

Join BYJU'S Learning Program