Which is the value of P/V Ratio ? Period IPeriod II Sales (Rs.) 700000 900000 Profit (Rs.) -10000 10000
When sales and profit figures are given for two consecutive periods, the Profit-Volume (P/V) Ratio is calculated as: P/V Ratio = (Change in Profit / Change in Sales) × 100.…
Choose your answer
Which is the value of P/V Ratio ?
| Period I | Period II | |
|---|---|---|
| Sales (Rs.) | 700000 | 900000 |
| Profit (Rs.) | -10000 | 10000 |
Answer and explanation
Correct answer A
When sales and profit figures are given for two consecutive periods, the Profit-Volume (P/V) Ratio is calculated as: P/V Ratio = (Change in Profit / Change in Sales) × 100. Here, Change in Profit = Rs. 10,000 − (−Rs. 10,000) = Rs. 20,000, and Change in Sales = Rs. 9,00,000 − Rs. 7,00,000 = Rs. 2,00,000. Therefore, P/V Ratio = (20,000 / 2,00,000) × 100 = 10%.
Practice for these exams
-
UGC NET Management