Accountancy Part BAccounting Ratios

Opening Inventory Rs50,000; Closing Inventory Rs40,000 and cost of re…

Opening Inventory Rs50,000; Closing Inventory Rs40,000 and cost of revenue from operations Rs7,20,000. What will be Inventory Turnover Ratio?

Answer & explanation

Correct answer: option 2

Opening Inventory Rs50,000; Closing Inventory Rs40,000 and cost of revenue from operations Rs7,20,000.
Average inventory = (Opening + closing)/2
                              = (50000 + 40000)/2
                              = ₹45000
Inventory Turnover Ratio = Cost of Revenue from Operations / Average Inventory
                                        = 7,20,000/45,000
                                       = 16 Times