Accounting · Ratio Analysis

In the standard computation of the Gross Profit Ratio used for financial analysis, which specific component constitutes the denominator?

Verified Solution4 OptionsUpdated: October 2026👁️1 View

1Average Inventory held during the financial year
2Revenue from Operations (Net Sales)✓
3Cost of Goods Sold (COGS)
4Total Gross Sales including all indirect taxes

Correct answer

Revenue from Operations (Net Sales)

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In the standard computation of the Gross Profit Ratio used for financial analysis, which specific component constitutes the denominator?

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In the standard computation of the Gross Profit Ratio used for financial analysis, which specific component constitutes the denominator?

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