94 :- Inventory Turnover Ratio 5 times; Cost of Revenue from Operations (Cost of Goods Sold) is Rs 18,90,000. Calculate Opening Inventory and Closing Inventory if Inventory at the end is 2.5 times more than that in the beginning.
Solution :-
Let the Opening Inventory be x.
Closing Inventory = x + 2.5x = 3.5x
Inventory Turnover Ratio = Cost of Goods Sold/Average Inventory
5 = 18,90,000/[(x + 3.5x)/2]
5 (4.5x) = 18,90,000 x 2
x = 18,90,000 x 2/5 x 4.5
Opening Inventory = Rs 1,68,000
Closing Inventory = 1,68,000 x 3.5
= Rs 5,88,000