83 :- Calculate Inventory Turnover Ratio from the following:
Opening Inventory Rs 58,000
Closing Inventory Rs 62,000
Revenue from Operations I.e, Net Sales Rs 6,40,000
Gross Profit Ratio 25%
Solution :-
Gross Profit = 25% of Net Sales
= 25/100 x 6,40,000
= Rs 1,60,000
Gross Profit = Net Sales – Cost of Goods Sold
1,60,000 = 6,40,000 – Cost of Goods Sold
Cost of Goods Sold = 6,40,000 – 1,60,000
= Rs 4,80,000
Average Inventory = Opening Inventory + Closing Inventory/2
= 58,000 + 62,000/2
= Rs 60,000
Inventory Turnover Ratio = Cost of Goods Sold/Average Inventory
= 4,80,000/60,000
= 8 Times