What will be the inventory turnover ratio if sales are ₹16,00,000, average inventory is ₹2,20,000 and the gross loss ratio is 10%?
Answer & explanation
Correct answer: option 3
The correct answer is option 3- 8 times.
* Cost of revenue from operations = Revenue from operations + gross loss
= 16,00,000 + 1,60,000
= ₹17,60,000
*Gross loss = Sales X percentage
= 16,00,000 x 10/100
= 1,60,000
Inventory Turnover Ratio = Cost of Revenue from Operations/ Average Inventory
= 17,60,000/2,20,000
= 8 times