A company has its inventories of Rs 80,000 on 31 march 2021 and on 31 march 2022 its inventories are 40,000 more than opening inventory. Revenue from operations of the year is of Rs 10,00,000. Rate of Gross Profit is 40%. What will be its inventory turnover ratio?

6 times

Inventory turnover ratio = Cost of goods sold / Average inventory
                                       = 6,00,000/ 1,00,000
                                       = 6 times
Cost of Goods Sold = Sales - Gross profit
Gross profit = 40% of 10,00,000 = 4,00,000
 Cost of goods sold  = 10,00,000 - 4,00,000 = 6,00,000
Average inventory = (opening + closing) / 2
                             = (80,000 + 1,20,000) / 2
                              = 1,00,000
* As it is given in the question that closing inventory is ₹40000 more than opening inventory. So, if opening inventory is ₹80000. Then closing inventory is 40000 + 80000 = ₹120000