SSCE HSC Business Studies Financial management strategies: The table shows information supp

The table shows information supplied by a business: Sales Cost of goods sold Gross profit $400,000 Expenses Net profit ? Gross profit ratio (gross profit ÷ sales) 66.7% Net profit ratio (net profit ÷ sales) 50% Which row in the following table shows the sales and net profit for this business? A - HSC - SSCE Business Studies - Question 20 - 2017 - Paper 1

Question 20

The table shows information supplied by a business: Sales Cost of goods sold Gross profit $400,000 Expenses Net profit ? Gross profit ratio (gross profit ÷ sales) ... show full transcript

Worked Solution & Example Answer:The table shows information supplied by a business: Sales Cost of goods sold Gross profit $400,000 Expenses Net profit ? Gross profit ratio (gross profit ÷ sales) 66.7% Net profit ratio (net profit ÷ sales) 50% Which row in the following table shows the sales and net profit for this business? A - HSC - SSCE Business Studies - Question 20 - 2017 - Paper 1

Step 1

Calculate Sales from Gross Profit Ratio

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Answer

The gross profit ratio is given by:

ext{Gross Profit Ratio} = \frac{\text{Gross Profit}}{\text{Sales}} \times 100\%

Given that the Gross Profit is $400,000 and the Gross Profit Ratio is 66.7%, we can rearrange the formula to find Sales:

\text{Sales} = \frac{\text{Gross Profit}}{\text{Gross Profit Ratio} / 100}\

Substituting the values, we get:

\text{Sales} = \frac{400,000}{66.7 / 100} = 600,000

Step 2

Calculate Net Profit from Net Profit Ratio

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Answer

The net profit ratio is given by:

\text{Net Profit Ratio} = \frac{\text{Net Profit}}{\text{Sales}} \times 100\%

We have calculated Sales as $600,000. Using the net profit ratio of 50%, we can find Net Profit:

\text{Net Profit} = \text{Sales} \times \left(\frac{\text{Net Profit Ratio}}{100}\right) = 600,000 \times 0.50 = 300,000

Step 3

Identify the Correct Row

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Answer

From the calculations, we have:

Sales: $600,000
Net Profit: $300,000 Thus, the correct row from the table is: **D.$ 600,000 $300,000**

Calculate Sales from Gross Profit Ratio

Calculate Net Profit from Net Profit Ratio

Identify the Correct Row

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