Question

Cost of Revenue from Operations 500000,Purchases 550000 ,Opening Inventory 100000 .Calculate Inventory Turnover Ratio

Answer 1

Answer:

The answer is 4

Explanation:

cost of rop = purchase +oi -ci

ci= 150000

Inventory turnover ratio = 500000/125000= 4

ci +oi/2 = 125000

Answer 2

Inventory Turnover Ratio = 4 times

Explanation:

Given:

Cost of Revenue from Operations = 500,000

Purchase = 550,000

Opening Inventory = 100,000

Inventory Turnover Ratio = ?

Calculation of Inventory Turnover Ratio:

Cost of Goods Sold = Purchase + Opening Inventory - Closing Inventory

500,000 = 550,000 + 100,000 - Closing Inventory

Closing Inventory = 150,000

Inventory Turnover Ratio = Cost of Goods Sold / [(Opening Inventory + Closing Inventory)/2]

Inventory Turnover Ratio = 500,000 / [(100,000 + 150,000)/2]

Inventory Turnover Ratio = 500,000 / [125,000]

Inventory Turnover Ratio = 4 times

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