Alpha manufacturing company has drawn up the following profit and loss account for the year ended...

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Alpha manufacturing company has drawn up the following profit and loss account for the year ended 31st March.
	
Document Preview: QUESTION :RATIO ANALYSISAlpha manufacturing company has drawn up the following profit and loss account for the year ended 31st March.To Opening stock		26,000		By Sales			160,000To Purchases			80,000		By Closing stock	 38,000To Wages				24,000To Manfacturing exp		16,000To Gross Profit c/d		52,000	198,000						198,000To Selling & Dist exp.	 4,000		By Gross profit b/d	 52,000To Admn.expenses		22,000		By compensation forTo value of Furniture lost	   800		acquisition of land	  4,800To General Expenses		 1,200	To Net Profit			28,000						58,800						58,800You are required to find out the operating ratio and the ratio of operating net profit to net sales.

David · Accepted Answer

SOLUTION :
Operating ratio = Operating cost / sales x 100
Operating cost  = Cost of goods sold + Selling & distribution exp + Admn Exp +   			  General Exp
Cost of goods sold = Opening stock + Purchases - Closing Stock
                   = $26,000 + $$80,000 - $38,000
                   = $108,

Alpha manufacturing company has drawn up the following profit and loss account for the year ended 31st March. Document Preview: QUESTION :RATIO ANALYSIS Alpha manufacturing company has drawn up the...

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