Practicing Success

Target Exam

CUET

Subject

Accountancy

Chapter

Accounting Ratios

Question:

On the basis of following information, answer the questions:

Particulars Amount (₹)
Inventory 100000
Total current assets 160000
Shareholders funds 400000
13% debentures 300000
Current liabilities 100000
Net profit before tax 351000
Cost of revenue from operations 500000

On the basis of above case, the inventory turnover ratio is:

Options:

2 times

6 times

7 times

5 times

Correct Answer:

5 times

Explanation:

Inventory turnover ratio = Cost of revenue from operations/ average inventory
                                       =500000/100000
                                       = 5 times

* When average inventory cannot be calculated then inventory will be assumed as average inventory.