# Ratio Analysis - Gross Profit ratio - MCQs with answers

## Ratio Analysis - Gross Profit ratio - MCQs with answers

1. Which of the following falls under Profitability ratios?

A) General Profitability ratios
B) Overall Profitability ratios
C) Comprehensive Profitability ratios

a) A and B
b) A and C
c) B and C
d) None of the above

2. General Profitability ratios are based on

a) Investments
b) Sales
c) a & B
d) None of the above

3. Gross Profit ratio is also termed as

a) Gross Profit Margin
b) Gross Margin to net sales
c) Both a and b
d) All of the above

ANSWER: c) Both a and b

4. While calculating Gross Profit ratio,

a) Closing stock is deducted from cost of goods sold
b) Closing stock is added to cost of goods sold
c) Closing stock is ignored
d) None of the above

ANSWER: a) Closing stock is deducted from cost of goods sold

5. While calculating Gross Profit, if net profit is given,

a) It can be converted into gross profit by adding interest to it
b) It can be converted into Gross profit by adding indirect expenses to it
c) Both a and b
d) None of the above

ANSWER: a) It can be converted into gross profit by adding interest to it

6. Gross profit ratio is calculated by

a) (Gross Profit/Gross sales)*100
b) (Gross Profit/Net sales)*100
c) (Net Profit/Gross sales)*100
d) None of the above

7. Given Sales is 1, 20,000 and Gross Profit is 30,000, the gross profit ratio is

a) 24%
b) 25%
c) 40%
d) 44%%

8. What will be the Gross Profit if, total sales is Rs 2,60,000 Cost of net goods sold is Rs 2,00,000 and Sales return is Rs 10,000?

a) 13%
b) 28%
c) 26%
d) 20%

9. If selling price is fixed 25% above the cost, the Gross Profit ratio is

a) 13%
b) 28%
c) 26%
d) 20%

10. Gross Profit ratio should be adequate to cover

a) Selling expenses
c) Dividends
d) All of the above