4 Views

Question : From the following information related to a company  Opening inventory of Rs.20,000; Closing inventory of Rs.22,000; Purchases of Rs.80,000;

Wages Rs.9,000; Carriage outwards Rs.2,000; Returns outwards Rs. 1,000; Revenue from

operations Rs.80,000; Carriage inwards Rs.4,000; Rent Rs.5,000. 

The inventory turnover ratio will be ------------

Option 1: 4 times

Option 2: 4.28 times

Option 3: 3 times

Option 4: None of the above


Team Careers360 18th Jan, 2024
Answer (1)
Team Careers360 20th Jan, 2024

Correct Answer: 4.28 times


Solution : Answer = 4.28 times

$\mathrm{Inventory Turnover Ratio}=\mathrm{\frac{Cost of goods sold}{Average Inventory}}$

Cost of Goods

Sold = 20,000+(80,000-1000)+9000+4000-22000

= 20,000+79000+13000-22000

= 90,000

$\begin{aligned}
\text { A. Inventory } & =\frac{20,000+22000}{2} \\
\\& =\frac{42000}{2}=21000
\end{aligned}$

Inventory Turnover

Ratio = 90,000/21000

= 4.28 times.
Hence, the correct option is 2.

Related Questions

UPES Integrated LLB Admission...
Apply
Ranked #28 amongst Institutions in India by NIRF | Ranked #1 in India for Academic Reputation by QS University Rankings | 16.6 LPA Highest CTC
Jindal Global Law School Admi...
Apply
Ranked #1 Law School in India & South Asia by QS- World University Rankings | Merit cum means scholarships | Application Deadline: 31st Jan'25
Chandigarh University Admissi...
Apply
Ranked #1 Among all Private Indian Universities In QS Asia Rankings 2025 | Scholarships worth 210 CR
Great Lakes PGPM & PGDM 2025
Apply
Admissions Open | Globally Recognized by AACSB (US) & AMBA (UK) | 17.3 LPA Avg. CTC for PGPM 2024 | Application Deadline: 1st Dec 2024
ISBR Business School PGDM Adm...
Apply
180+ Companies | Highest CTC 15 LPA | Average CTC 8 LPA | Ranked as Platinum Institute by AICTE for 6 years in a row | Awarded Best Business School...
Nirma University Law Admissio...
Apply
Grade 'A+' accredited by NAAC
View All Application Forms

Download the Careers360 App on your Android phone

Regular exam updates, QnA, Predictors, College Applications & E-books now on your Mobile

150M+ Students
30,000+ Colleges
500+ Exams
1500+ E-books