On the basis of following information, answer the questions:
| Particulars | Amount (₹) |
| Inventory | 1,00,000 |
| Total current assets | 1,60,000 |
| Shareholders funds | 4,00,000 |
| 13% debentures | 3,00,000 |
| Current liabilities | 1,00,000 |
| Net profit before tax | 3,51,000 |
| Cost of revenue from operations | 5,00,000 |
On the basis of above case, the inventory turnover ratio is:
Answer & explanation
Correct answer: option 4
The correct answer is option 4- 5 times.
Inventory turnover ratio = Cost of revenue from operations/ average inventory
= 5,00,000/1,00,000
= 5 times
* When average inventory cannot be calculated then inventory will be assumed as average inventory.