From the following information, calculate inventory turnover ratio:

Revenue from operations = ₹4,00,000
Average Inventory = ₹55,000
Gross Profit Ratio = 10%

6.55 times

The correct answer is Option (3) - 6.55 times.

Gross profit ratio = 10%
Gross profit ratio = Gross profit/ Revenue from operations x 100
                    10  = Gross profit/400000 x 100
Gross profit = 10 x 400000/100
                  = 40000

Cost of goods sold = Revenue from operations - Gross profit
                           = 400000 - 40000
                           = ₹360000

Average inventory = ₹55000

Inventory turnover ratio = Cost of goods sold/ Average inventory
                                    = 360000/55000
                                   = 6.55 times