G.P. & N.P. CALCULATION IS RIGHT OR WRONG

A/c entries 2598 views 3 replies

Muhammad Arshad Ashrafi

Accountant

189 Points Joined February 2011

DEAR ALL

PLEASE SUGGEST I AM WRITE OR WRONG IN G.P. & N.P. CALCULATION.

ITS A PROP. FIRM PREVIOUS FINANCIAL YEAR 09-10 M/s.X COLOR CLOSING DT 31.03.10 G.P. IS 12.28% & N.P. IS 2.89%

THIS YEAR M/s.X COLOR CONVERT PROP. FIRM TO PARTNERSHIP FIRM EFFECTED ON 01.01.2011 SO WE CLOSED THE ACCOUNT ON DT.31.12.10 AS PROP. FIRM

THE REQ. SUGGESTION IS HOW TO CALCULATE THE G.P. AND N.P. ON 31.12.10 IF WE MAINTAIN THE % AS PREV.YEAR CLOSING.

I AM DOING AS BELOW

PREVIOUS YEAR G.P. 12.28% / 4 MONTH = 3.07% X 3 MONTH = 9.21% IS IT RIGHT OR WRONG ?

PREVIOUS YEAR N.P. 2.89% / 4 MONTH = 0.7225% X 3 MONTH = 2.1675% IS IT RIGHT OR WRONG ?

THANKS IN ADVANCE

ARSHAD

Replies (3)

Kumar

666 Points Joined December 2009

Last year GP and NP ratio shall not be directly extrapolated.

It should reflect the Current 9m (Apr 10 to Dec 10) performance.

If at all accounts have not been drawn up for the above 9m, 12m accounts to be drawn up and the 12m % can be used for 9m ratios.

Shriram Ramachandran

IPCC Student CWA Inter & Processing off

492 Points Joined October 2010

Hi friends my suggestion is that normally the GP & NP ratio is calculated by dividing GP & NP by sales i.e.

GP Ratio = GP / Sales & NP Ratio = NP/ Sales

So u dont need to convert the ratio for 9m.

U have to take 9m Sales for finding GP & NP at 31.12.2010

For example total sales for 10-11 is 12000 then have to find the sales for 9m months as 9000 in that 9000 u have to apply ur GP & NP ratio (12.28% & 2.89%) to find the GP & NP at 31.12.2010

Thanks If i am wrong plz correct me.

R Shriram

Muhammad Arshad Ashrafi

Accountant

189 Points Joined February 2011

Originally posted by : Shriram Ramachandran

Hi friends my suggestion is that normally the GP & NP ratio is calculated by dividing GP & NP by sales i.e.

GP Ratio = GP / Sales & NP Ratio = NP/ Sales

So u dont need to convert the ratio for 9m.

U have to take 9m Sales for finding GP & NP at 31.12.2010

For example total sales for 10-11 is 12000 then have to find the sales for 9m months as 9000 in that 9000 u have to apply ur GP & NP ratio (12.28% & 2.89%) to find the GP & NP at 31.12.2010

Thanks If i am wrong plz correct me.

R Shriram

Thanks Brother for guidance