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
Option 1: 6 times
Option 2: 4 times
Option 3: 8 times
Option 4: None of the above
Answer (1)
16th Jan, 2024
Correct Answer: 8 times
Solution : Answer = 8 times
Inventory Turnover
$\mathrm{Ratio}=\frac{\text{Cost of goods Sold}}{\text{Average Inventory}}$
$\Rightarrow \quad \frac{2,40,000}{30,000}=8 \text { times }$
Cost of goods sold
= Sales - G. P
= 3,20,000 - 80,000
= 2,40,000
Average Inventory = $\frac{29000+31000}{2}$
= 60,000/2 = 30,000
Hence, the correct option is 3.
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