(i) Gross profit ratio = (Gross Profit)/(Revenue from operations) x 100

= 4,000/20,000 x 100

= 20%

Calculation of interest on drawings of Praveen (using average period) 

Cost of revenue from operations = Purchase of stock-in-trade - Changes in inventory + Direct expenses

 = 17,000 – 1,000 + 0 

= Rs. 16,000 

Gross profit = Revenue from operations – Cost of revenue from operations 

= 20,000 – 16,000 

= Rs. 4,000

(ii) Net profit ratio = (Net profit after tax )/(Revenue from operations) x 100

 = 1,500/20,000 x 100

= 7.5%

Tutorial note: 

It is assumed that there is no tax payable.

(iii) Operating cost ratio = (Operating Cost)/(Revenue from operations) x 100

= 18,400/20,000 x 100

= 92%

Operating cost = Cost of revenue from operations + Operating expenses 

Operating expenses = Other expenses = Rs. 2,400 

Operating cost = 16,000 + 2,400 

= Rs. 18,400

(iv) Operating profit ratio = (Operating profit)/(Revenue from operations) x 100

= 1,600/20,000 x 100

= 8%

Operating profit = Revenue from operations – Operating cost 

= 20,000 – 18,400 

= Rs. 1,600