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A business has the following financial information - HSC - SSCE Business Studies - Question 10 - 2024 - Paper 1

Question 10

A business has the following financial information. Sales $800 000 Cost of goods sold $200 000 Gross profit $600 000 Net profit $250 000 Expense r... show full transcript

Worked Solution & Example Answer:A business has the following financial information - HSC - SSCE Business Studies - Question 10 - 2024 - Paper 1

Step 1

Calculate total expenses

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Answer

Total expenses can be calculated by subtracting the net profit from the gross profit:

Total Expenses = Gross Profit - Net Profit Total Expenses = $600,000 -$ 250,000 = $350,000

Step 2

Calculate expense ratio

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Answer

The expense ratio is calculated using the formula:

Expense ext{ }ratio = \frac{Total ext{ }expenses}{Sales}

Substituting the values:

Expense ext{ }ratio = \frac{350,000}{800,000}

Calculating this gives:

Expense ext{ }ratio = 0.4375 ext{ or } 43.75\% ext{ (approximately 44\%)}

Step 3

Select the correct answer

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Answer

The correct answer is D. 44%.

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