Question

Opening inventory Rs. 50000 closing inventory Rs. 40000 cost of revenue from operation Rs 720000. What will be the inventory turnover ratio?

Answer 1

Answer:

16 times is your answer

Explanation:

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Answer 2

Answer:

Inventory Turnover Ratio will be 16 times.

Explanation:

★ Inventory Turnover Ratio :

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

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

$\sf{\longrightarrow{\dfrac{7,20,000}{ \frac{50,000 \: + \:40,000}{2}}}}$

★ Average Inventory =

$\sf{\longrightarrow{\dfrac{Ope.ning \: Inventory \: + \: Closing \: Inventory}{2}}}$

$\sf{\longrightarrow{\dfrac{50,000 \: + \:40,000}{2}}}$

$\sf{\longrightarrow{\dfrac{90,000}{2}}}$

Average Inventory = 45,000

★ Inventory Turnover Ratio :

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

$\sf{\longrightarrow{\dfrac{7,20,000}{45,000}}}$

$\longrightarrow$ 16 times

Inventory Turnover Ratio = 16 times.

Therefore, Inventory Turnover Ratio will be 16 times.