Question

Opening stock 29000,purchases 242000,sales 320000,gross profit ratio 25%on sales calculate inventory turnover ratio

Answer 1

Opening stock 29000,purchases 242000,sales 320000,gross profit ratio 25%on sales calculate inventory turnover ratio

Answer 2

$\sf\red{Cost \:of \:revenue \:from \: operations\:(cost \:of \:goods\: sold)= Revenue \: from \: operations - Gross \: profit}$

$\implies$$\sf{3,20,000-80,000\: (i.e., 25\% \: of \: 3,20,000)}$

$\implies$$\sf{₹2,40,000}$

$\sf\red{Closing \: Inventory = Opening \: inventory + purchases - cost \: of \: revenue \: from \: operations}$

$\implies$$\sf{29,000+2,42,000-2,40,000}$

$\implies$$\sf{31,000}$

$\sf\red{Average \: Inventory = \frac{(Opening \: inventory + Closing \: inventory)}{2}}$

$\implies$$\sf{\frac{(29,000 + 31,000)}{2} }$

$\implies$$\sf{₹30,000}$

$\sf\red{Inventory \: Turnover \: ratio = \frac{Cost \: of \: revenue \: from \: operations}{Average \: inventory} }$

$\implies$$\sf{\frac{2,40,000}{30,000} }$

$\implies$$\sf{8 \: times}$