opening inventory 60,000 , closing inventory 1,00,000 stock turnover Ratio 8times, selling price 25% above cost. calculate the Gross profit ratio
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Answer: stock turnover ratio = COGS /average inventory
8 = COGS / 80000
COGS = 640000
average inventory = opening + closing / 2
= 60000 + 100000/2 = 80000
sale = 640000 +{ 640000×25/100} = 800000
gross profit = sales - COGS
= 800000 - 640000 = 160000
GROSS PROFIT RATIO = GROSS PROFIT / SALES ×100
= 160000 / 800000 ×100
= 20 %
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