80 :- Cost of Revenue from Operations Rs 5,00,000; Purchases Rs 5,50,000; Opening Inventory Rs 1,00,000
Calculate Inventory Turnover Ratio.
Solution :-
Closing Inventory = Opening Inventory + Purchases – Cost of Goods Sold
= 1,00,000 + 5,50,000 – 5,00,000
= Rs 1,50,000
Average Inventory = Opening Inventory + Closing Inventory/2
= 1,00,000 + 1,50,000/2
= 1,25,000
Inventory Turnover Ratio = Cost of Revenue from Operations (Cost of Goods Sold)/Average Inventory
= 5,00,000/1,25,000
= 4 Times