inventory turnover ration is 3 times revenue from operation. are 1,80,000 and opening inventory is rs 2000 more than the closing inventory calculate opening and closing inventory when goods are sold at 20% profit on cost
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2666.6
Explanation:
Inventory Turnover ratio = cost of goods sold/ Average inventory
3 = 180000/ Average inventory
Average inventory= 60000
Let the closing inventory = x
opening inventory = 2000 +x +x
= 2000 +2x
Average inventory = Opening inventory + closing inventory / 2
= 2000 + 2x + x /2
=1000 + 3x/2
3x /2 = 1000
3x = 2000
x = 2000 /3
x = 666.6
Opening inventory = 2000 + x
= 2000 + 666.6
= 2666.6
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