Read the following information and answer the following question.

Calculate average age of inventory.

2 months

The correct answer is option 2 i.e. 2 months.

Inventory Turnover Ratio = Cost of Revenue from Operations / Average Inventory
                                        = 3,00,000/50,000
                                        = 6 times

Average inventory = (Inventory in the beginning + Inventory at the end)/ 2
                                = (55,000 + 45,000) / 2
                                = ₹50,000

Average age of inventory = No of months in a year/ Inventory turnover ratio
                                           =  12/6
                                           = 2 MONTHS