Question

Answer this question

Answer 1

Hey! The solution to your query is provided below :

Cost of Goods sold = Net sales - Gross profit

= Rs. 6,00,000 - 30% of Rs. 6,00,000
= Rs. 6,00,000 - Rs. 1,80,000
= Rs. 4,20,000

Cost of Goods sold = Opening Inventory + purchases - closing Inventory

Rs. 4,20,000 = Rs. 50,000 + Rs. 3,90,000 - closing Inventory

Closing Inventory = Rs. 50,000 + Rs. 3,90,000 - Rs. 4,20,000
= Rs. 20,000

Average Stock = Opening Stock + Closing Stock/2
= 50,000 + 20,000/2
= Rs. 35,000

Stock Turnover Ratio = Cost of Goods Sold/ Average Stock
= 4,20,000 + 35,000
= 12 times.

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