Opening Inventory of a firm is Rs80,000. Cost of revenue from operations is Rs 6,00,000. Inventory Turnover Ratio is 5 times. Its closing Inventory will be:
Answer & explanation
Correct answer: option 1
Let Closing Inventory=A
Average inventory = (Opening + closing)/2
= (80000 + A)/2
Inventory Turnover Ratio = Cost of Revenue from Operations / Average Inventory
5 = 6,00,000/(80,000+A)/2
5*(80000+A) = 6,00,000*2
80,000 + A = 12,00,000/5
80,000 + A = 240000
A = 1,60,000