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 -
Option 1: 7.4 Times
Option 2: 6.2 Times
Option 3: 7 Times
Option 4: 6.6 Times
Correct Answer: 6.6 Times
Solution : By dividing the cost of items by the average inventory for the same time period, the inventory turnover ratio is derived. A greater ratio typically denotes good sales while a lower ratio generally denotes dismal sales.
Explanation:
cost of goods sold
_____________
AVG stock
Cost of goods sold = Purchase + Wages - Carrige = 600000 + 200000 + 25000 = 825000
Avg. Stock = (Opening inventory + Closing Inventory) / 2
= (100000 + 150000) / 2
= 125000
Hence the inventory turnover ratio is = 825000 / 125000
= 6.6 Times
Hence the correct answer is option 4.
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
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
Question : Rs.2,00,000 is the cost of revenue from operations, Inventory turnover 8 times; Inventory at the beginning is only 1.5 times than the Inventory at the end. The values of Opening inventory is
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