Prepare a common‑size statement of profit and loss for the following data, expressing each item as a percentage of sales: - Sales = Rs. 12,00,000 - Cost of Goods Sold = Rs. 7,20,000 - Administrative Expenses = Rs. 1,00,000 - Selling Expenses = Rs. 80,000 - Net Profit = Rs. 1,20,000

Step-by-step solution

1. 1. Write each item as a fraction of sales and then convert to percent. 2. Sales = 100% (by definition). 3. COGS: $(7,20,000/12,00,000)\times 100=60.00\%$. 4. Administrative Expenses: $(1,00,000/12,00,000)\times 100=8.33\%$. 5. Selling Expenses: $(80,000/12,00,000)\times 100=6.67\%$. 6. Net Profit: $(1,20,000/12,00,000)\times 100=10.00\%$. 7. Present the percentages in a table format: Sales – 100.00%; COGS – 60.00%; Admin – 8.33%; Selling – 6.67%; Net Profit – 10.00%.
2. 8. Check that all percentages add up to 100% (they should, ignoring rounding errors).

Concept tested: Common‑size financial statements

Published 1 October 2026 · How this solution was prepared and checked