Question

counting Ratios 4.99 3 ventory Turnover Ratio 1. From the following details calculate Inventory Turnover Ratio Cost of Revenue from Operations Cost of Goods Sold) inventory in the beginning of the year Inventory at the dose of the year 4,50,000 1,25,000 1,75,000 Inventory Turnover Ratio - 3 Times.​

Answer 1

Explanation:

★ Inventory Turnover Ratio :

$\sf{\longrightarrow{\dfrac{Cost \: of \: Revenue \: from \: Operation}{Average \: Inventory}}}$

$\sf{\longrightarrow{\dfrac{Cost \: of \: Revenue \: from \: Operation}{ \frac{Ope.ning \: Inventory \: + \: Closing \: Inventory}{2}}}}$

$\sf{\longrightarrow{\dfrac{4,50,000}{ \frac{1,25,000 \: + \: 1,75,000}{2}}}}$

★ Average Inventory =

$\sf{\longrightarrow{\dfrac{1,25,000 \: + \: 1,75,000}{2}}}$

$\sf{\longrightarrow{\dfrac{300,000}{2}}}$

Average Inventory = 1,50,000

★ Inventory Turnover Ratio =

$\sf{\longrightarrow{\dfrac{Cost \: of \: Revenue \: from \: Operation}{Average \: Inventory}}}$

$\sf{\longrightarrow{\dfrac{4,50,000}{1,50,000}}}$

Inventory Turnover Ratio = 3 times.

Answer 2

Explanation:

Inventory Turnover Ratio =

Cost of Revenue from Operations/Average Inventory

Average Inventory = beginning Inventory + closing inventory/2

Average Inventory = 1,25,000 + 1,75,000/2

Average Inventory = 3,00,000/2

Average Inventory = 1,50,000

Inventory Turnover Ratio =

Cost of Revenue from Operations/Average Inventory

= 4,50,000/1,50,000

= 3

Inventory Turnover Ratio = 3 times

Hence, Inventory Turnover Ratio = 3 times