81 :- Calculate Inventory Turnover Ratio from the following information:
Opening Inventory is Rs 50,000; Purchases Rs 3,90,000; Revenue from operations,I.e, Net Sales is Rs 6,00,000; Gross Profit Ratio 30%
Solution :-
Gross Profit Ratio = 30% of Net Sales
= 30/100 x 6,00,000
= Rs 1,80,000
Gross Profit = Net Sales – Cost of Goods Sold
1,80,000 = 6,00,000 – Cost of Goods Sold
Cost of Goods Sold = Rs 4,20,000
Cost of Goods Sold = Opening Inventory + Purchases – Purchase Return + Direct Expenses – Closing Inventory
4,20,000 = 50,000 + 3,90,000 – 0 + 0 – Closing Inventory
Closing Inventory = 4,40,000 – 4,20,000
Closing Inventory = Rs 20,000
Average Inventory = Opening Inventory + Closing Inventory/2
= 50,000 + 20,000/2
= Rs 35,000
Inventory Turnover Ratio = Cost of Goods Sold/Average Inventory
= 4,20,000/35,000
= 12 Times