Gross Profit (Audit)

This query is : Resolved

( Author )
31 July 2010

what may be the reason for changes in GP Ratio of 2 Asst. Years?
For Eg. in first A Y the turnover was 20000, GP 10%, i. e., Rs 2000, but in the next year the turnover hikes to Rs. 30000, 9% GP, i.e, 2700.

CMA Ramesh Krishnan

( Expert )
31 July 2010

The possible reasons

1. Selling price reduced
2. Cost of inputs may increase
3. other direct cost may high

CA. BIJENDER KR. BANSAL

( Expert )
31 July 2010

AGREED,
PROFIT MARGIN REDUCED DUE TO INCREAE IN COST OF GOODS SOLD OR SALE PRICE DECREASE DUE TO COMPITION.
MFG COST INCREASED
IN CASE OF MFG CO, CONSUMPTION OF RAW MATERIAL INCREASED.

CMA.Palani Arumugam

( Expert )
31 July 2010

Change of G/P ratio may be due to

1) Change in selling price per unit
2) Change in Raw material price per unit
3) Change of consumption ratio i.e. change of input/output ratio.
4) Changes in other direct expenses like, increase/decrease in wages per hour, etc.