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 ………
Option 1: 8 times
Option 2: 2.4 times
Option 3: 1.2 times
Option 4: 12 times
Correct Answer: 12 times
Solution : Answer = 12 times
Inventory Turnover Ratio = Cost of goods sold/Average Inventory
$\begin{gathered}\Rightarrow \quad 4,80,000 /40,000 \\ =12 \text { times }\end{gathered}$
Cost of goods sold = Sales - G.P
$x=6,00,000-\frac{x}{4}$
$\begin{aligned} 5 x & =6,00,000 \times 4 \\ x & =4,80,000\end{aligned}$
Cost of goods sold = 4,80,000
Average Inventory
$\begin{aligned} & =\frac{28000+58000}{2} \\ & =80,000 / 2 \\ & =40,000\end{aligned}$
Hence, the correct option is 4.
