Question

calculate inventory turn over ratio
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Answer 1

Answer:

Inventory turnover ratio = cost of revenue from operation / average inventory

Answer 2

Inventory Turnover ratio = Cost Of Goods Sold / Average Inventory

Explanation:

• Computation of Cost Of Goods Sold

Particulars                                   Amount

Stock at beginning                           xx

Add: Purchase during the year       xx

Less: Stock at ending                      xx      

Cost of Goods Sold                          xx      

• Computation of Average Inventory

Average Inventory = [Opening Inventory + Closing Inventory] / 2

Inventory turnover ratio is computed to find the requirement of inventory for sale at a particular time.

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