85 :- Revenue from Operations Rs 4,00,000; Gross Profit Rs 1,00,000; Closing Inventory Rs 1,20,000; Excess of Closing Inventory over Opening Inventory Rs 40,000. Calculate Inventory Turnover Ratio.
Solution :-
Revenue from Operations = Rs 4,00,000
Opening Inventory = 1,20,000 – 40,000
= Rs 80,000
Gross Profit = Revenue from Operations – Cost of Goods Sold
1,00,000 = 4,00,000 – Cost of Goods Sold
Cost of Goods Sold = Rs 3,00,000
Average Inventory = Opening Inventory + Closing Inventory/2
= 80,000 + 1,20,000/2
= Rs 1,00,000
Inventory Turnover Ratio = Cost of Goods Sold/Average Inventory
= 3,00,000/1,00,000
= 3 Times