Question

Earning before tax = 30% from Net sales, company is relying on equity which is means interest =0 . inventory = 4000000 net sales= 48000000. operating expense =5% of gross purchase , Gross purchase = 95%

Q: find out the Net Purchase

note . formulas for NP

1.net Purchase = Cost of goods sold +Ending inventory _ beginning inventory
OR
2. net purchase = gross profit _ purchase retain

Answer 1

EBT = 30%

Net Sales =48000000

Earning Before Tax = 48000000*30% =1,44,00,000

As interest is 0

EBIT = 1,44,00,000

EBIT = Revenue – COGS – Operating Expense

1,44,00,000 = 48000000 – (95% of purchase + 4.75% (5*95) of Gross Purchase)

3,36,00,000 = 99.75% of Gross Purchase

COGS = 3,35,16,000

Gross Purchase = 95% of 3,35,16,000 = 3,18,40,200

Opening Inventory = COGS – Purchase + Closing Inventory

                             = 3,35,16,000-3,18,40,200+40,00,000

                             = 56,75,800

Net Purchase = Cost of goods sold +Ending inventory _ beginning inventory

                   = 3,35,16,000+40,00,000-56,75,800

                   = 3,18,40,200