Question

Q.27. Financial Statement of X Ltd., shows the following data:
Opening stock
Rs.1,50,000
Total purchases (including
Cash purchases of Rs. 1,75,000) Rs. 10,50,000
Closing stock
Rs. 1,20,000
Stock turnover ratio is -​

Answer 1

Explanation:

Calculate Inventory Turnover Ratio from the data given Below:

₹ ₹

Inventory in the beginning of the year 20,000 Carriage Inwards 5,000

Inventory at the end of the year 10,000 Revenue from Operations, i.e., Sales 1,00,000

Purchases 50,000

State the significance of this ratio.

ANSWER:

Cost of Goods Sold = Opening Stock + Purchases + Carriage Inwards − Closing Stock

= 20,000 + 50,000 + 5,000 − 10,000 = 65,000