From the following information, calculate inventory Turnover Ratio :
| PARTICULARS | AMOUNT (₹) |
| Inventory in the beginning | 18,000 |
| Inventory at the end | 22,000 |
| Net purchases | 46,000 |
| Wages | 14,000 |
| Revenue from operations | 80,000 |
| Carriage inwards | 4,000 |
Answer & explanation
Correct answer: option 3
The correct answer is option (3)- 3 times.
COST OF REVENUE FROM OPERATIONS = Inventory in the beginning + Net Purchases + Wages + Carriage inwards – Inventory at the end
= 18,000 + 46,000 + 14,000 + 4,000 – 22,000
= 60,000
Average Inventory = (Inventory in the beginning + Inventory at the end)/2
= (18,000 + 22,000) / 2
= 40,000/2
= ₹20,000
Inventory Turnover Ratio = Cost of Revenue from Operations/Average Inventory
= 60,000/20,000
= 3 Times