If opening inventory is ₹1,20,000, Cost of Revenue from Operations is ₹10,00,000 and the Inventory Turnover Ratio is 5 Times, then what will be the Closing Inventory?
Answer & explanation
Correct answer: option 3
The correct answer is option 3- ₹2,80,000.
Average inventory = cost of revenue from operations/ inventory turnover ratio
= 10,00,000/5
= ₹2,00,000
Average inventory = (Opening + closing)/2
2,00,000 = (1,20,000 + closing)/2
Closing inventory = 4,00,000 - 1,20,000
= ₹2,80,000