Question

Q.31 a) From the following information calculate the Inventory Turnover Ratio.

Revenue from Operations – Rs. 2,00,000

Gross Profits 25% on cost

Opening Inventory is 1/3rd of the value of the Closing Inventory Closing inventory is 30%

of Revenue from Operations

b) Net Profit ratio of a company was 10%. Its indirect expenses were Rs. 40,000 and its cash

revenue from operations were Rs. 1,50,000. The credit revenue from operations was

60% of the total revenue from operation. Calculate the Gross profit ratio of the

Company. 6​

Answer 1

Answer:

GP Ratio = 25% on Cost = 20% on Sales

Gross Profit = 40000

Cost of Goods sold = 1,60,000

Closing Inventory = 60,000

Opening Inventory = 20,000

Average Inventory = 40,000

Inventory Turnover Ratio :

1,60,000 / 40,000 = 4

Ideal Inventory Turnover Ratio = 5 to 10