Question

75,000
67. From the following information, calculate Inventory Turnover Ratio:
Opening Inventory
*40,000 Closing Inventory
Purchases
92,000 Wages
Carriage Inwards
* 4,000
Freight Outwards
12,000
6,000
7,500​

Answer 1

Explanation:

ITR=COGS/AVERAGE INVENTORY

COGS= OPENING INVENTORY + NET PURCHASES+ DIRECT EXPENSES - CLOSING INVENTORY

COGS= 40000+ 92000+6000+4000-12000

= 130000

AVERAGE INVENTORY = 40000+ 12000/2

= 26000

THEREFORE,

ITR = 130000/26000

= 5 TIMES.