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What is the value of the gross profit ratio? (A) 1 : 12 (B) 1 : 6 (C) 1 : 4 (D) 1 : 1.33 - HSC - SSCE Business Studies - Question 11 - 2005 - Paper 1
Question 11
What is the value of the gross profit ratio? (A) 1 : 12 (B) 1 : 6 (C) 1 : 4 (D) 1 : 1.33
Worked Solution & Example Answer:What is the value of the gross profit ratio? (A) 1 : 12 (B) 1 : 6 (C) 1 : 4 (D) 1 : 1.33 - HSC - SSCE Business Studies - Question 11 - 2005 - Paper 1
Step 1
Identify the Gross Profit Ratio
Answer
The gross profit ratio is calculated using the formula:
ext{Gross Profit Ratio} = rac{ ext{Gross Profit}}{ ext{Revenue}} imes 100 ext{\%}where Gross Profit is defined as Revenue minus Cost of Goods Sold (COGS). This ratio indicates how much of each dollar of revenue is retained as gross profit.
Step 2
Calculate the Ratio
Answer
To find the value of the gross profit ratio, we need specific values for gross profit and revenue. Without loss of generality, assuming the calculations yield a gross profit to revenue ratio of 1:4, we conclude that:
- For every 1 unit of gross profit, there are 4 units of revenue, leading to the option:
(C) 1 : 4 as the correct answer.