SOLUTION
Cash sales = 20% of Total Sales
Let Total Sales be ‘x’
Therefore, Cash Sales = 20% of x
Total Sales = Cash Sales + Credit Sales
x = 20 / 100x + 5,00,000
x-20 / 100x =5,00,000
80 / 100x =5,00,000
Cost of Goods Sold = Purchases – Excess of Closing Stock over Opening Stock
= Rs. 4,00,000 – Rs. 25,000
= Rs. 3,75,000
Gross Profit = Total Sales – Cost of Goods Sold
= 6,25,000 – 3,75,000
= Rs. 2,50,000
Gross profit ratio = Gross profit / Net Sales × 100
= 2,50,000×100 / 6,25,000
= 40%