Question :
From the following data, calculate Inventory Turnover Ratio: Total Sales Rs. 5,00,000; Sales Return Rs. 50,000; Gross Profit Rs. 90,000; Closing Inventory Rs. 1,00,000; Excess of Closing Inventory over opening inventory Rs. 20,000.
Option 1: 6 Times
Option 2: 4 Times
Option 3: 3 Times
Option 4: 5 Times
Correct Answer: 4 Times
Solution :
Inventory turnover ratio = Cost of goods sold ( WN 1)
----------------------------------------
Average inventory (WN 2)
= 3,60,000
-----------------
90,000
= 4 Times
Hence the correct answer is option 2.
Working notes:-
1) Cost of goods sold = Gross sales - (Sales return + gross profit)
= 5,00,000 - (50,000 + 90,000)
= 3,60,000.
2) Average Inventory = 1,00,000 + 80,000
-------------------------
2
= 90,000.
Closing inventory is 20,000 more than opening inventory hence opening inventory is 1,00,000 - 20,000 = 80,000.
Question : Opening inventory Rs.1,00,000: Closing inventory Rs.1,50,000: Purchase Rs.6,00,000: Carriage Rs.25,000: Wages Rs. 2,00,000. calculate inventory turnover ratio -
Question : Opening Inventory Rs.29,000; Closing Inventory Rs.31,000; Revenue from Operations (Sales) Rs.3,20,000; Gross Profit Ratio 25% on Revenue from Operations.
Inventory Turnover Ratio will be
Question : Opening Inventory Rs.28,000
Closing Inventory Rs.52,000
Revenue from Operations (Sales) Rs.6,00,000
Gross Profit 25% on the cost of revenue from operations
The inventory turnover ratio will be ………
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