Question

46. (Gross Profit & Sales when Inventory T/O ratio is given) From the following
particulars, determine the amount of gross profit and sales :
(Ans. 3 times
Average stock
Inventory turnover ratio
Selling price
80,000
6 times
25% above cost
(All India, S.S.C.)
profit 1,20,000, Sales * 6,00,000)​

Answer 1

Stock turnover ratio = Cost of goods sold/Average inventory

6 = Cost of goods sold/ 8000

Cost of goods sold = Rs.48000

Selling price = 25 % above cost

Therefore Gross profit = Cost of goods sold x 25%

= 48000 x 25%

= Rs.12000