The cost of goods sold (COGS) is a measure of the direct costs associated with producing and selling a product. It includes the cost of materials, labor, and overhead expenses that are directly involved in the production process. In this case, the cost of goods sold is given as `6,00,000.



Gross profit is the profit a company makes after deducting the cost of goods sold from its net sales. It is typically expressed as a percentage of net sales. In this case, the gross profit is given as 25% on sales.



Net sales are calculated by subtracting the cost of goods sold from the total sales revenue. The formula for net sales is:

Net Sales = Total Sales Revenue - Cost of Goods Sold

We can rearrange this formula to solve for total sales revenue:

Total Sales Revenue = Net Sales + Cost of Goods Sold

Substituting the given values, we get:

Total Sales Revenue = Net Sales + `6,00,000

To calculate the net sales, we need to solve for it:

Net Sales = Total Sales Revenue - `6,00,000

We know that the gross profit is 25% on sales. We can use this information to calculate the total sales revenue:

Gross Profit = (Total Sales Revenue - Cost of Goods Sold) / Total Sales Revenue

Substituting the given values, we get:

0.25 = (Total Sales Revenue - `6,00,000) / Total Sales Revenue

Multiplying both sides by Total Sales Revenue, we get:

0.25 * Total Sales Revenue = Total Sales Revenue - `6,00,000

Simplifying, we get:

0.75 * Total Sales Revenue = `6,00,000

Dividing both sides by 0.75, we get:

Total Sales Revenue = `8,00,000

Now that we have calculated the total sales revenue, we can calculate the net sales:

Net Sales = Total Sales Revenue - `6,00,000

Net Sales = `8,00,000 - `6,00,000

Net Sales = `2,00,000



Gross profit is the profit a company makes after deducting the cost of goods sold from its net sales. In this case, we have already calculated the net sales as `2,00,000 and the cost of goods sold as `6,00,000. Using the formula for gross profit, we get:

Gross Profit = Net Sales - Cost of Goods Sold

Substituting the given values, we get:

Gross Profit = `2,00,000 - `6,00,000

Gross Profit = `-4,00,000

Since the gross profit is negative, it indicates that the cost of goods sold is greater than the net sales. This means that the company is operating at a loss.