If sales is Rs 10,00,000, sales returns is Rs 50,000, Profit Before Tax is Rs

Discussion Forum : Accounting Ratios

Question -

If sales is Rs 10,00,000, sales returns is Rs 50,000, Profit Before Tax is Rs 2,00,000, Income tax is 40%, Net profit ratio is___

Options:

A . 12.63 %

B . 12%

C . 10 %

D . 24%

Answer: Option A
:
A

Tax = 40% of 2,00,000 = Rs 80,000
Net profit after tax = Rs 1,20,000
Net sales = Rs 10,00,000 - Rs 50,000
= Rs 9,50,000
$N e t P r o f i t R a t i o = \frac{1, 20, 000}{9, 50, 000} \times 100 = 12.63 %$

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