Question

pfizer ltd has inventory turnover ratio of 8 times, gross profit rs 90000 and gross profit ratio 25% its avg inventory is​

Answer 1

ans

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Answer 2

ANSWER:

The average inventory is Rs $33750$.

Step-by-step explanation:

Given: The inventory turnover ratio of $8$ times. The Gross Profit of Rs $90,000$ and the Gross Profit Ratio of $25$%.

To find the Average inventory

Solution:

Gross Profit Ratio $= \frac{Gross Profit}{Net Sales}$ ×$100$

 Let's assume Net Sales as $x$ and substitute the values.

$25 = \frac{90,000}{x}$ ×$100$

$25x = 90,00,000$

$x = 3,60,000$

In this way, we get the sales as Rs $3,60,000$.

$Cost of good sold = Sales - Gross Profit$

                       $= 3,60,000 - 90,000\\= 2,70,000$

In this way, we get the Cost of goods sold as Rs$2,70,000$.

$Inventory Turnover Ratio = \frac{Cost of Goods sold}{Average inventory}$

$8 = \frac{3,70,000}{Average inventory}$

$Average inventory = 33,750$

Therefore, the average inventory is Rs$33,750$.

PROJECT CODE: #SPJ3

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