Question : Opening Inventory Rs.28,000
Closing Inventory Rs.52,000
Revenue from Operations (Sales) Rs.6,00,000
Gross Profit 25% on the cost of revenue from operations
The inventory turnover ratio will be ………
Option 1: 8 times
Option 2: 2.4 times
Option 3: 1.2 times
Option 4: 12 times
Correct Answer: 12 times
Solution : Answer = 12 times
Inventory Turnover Ratio = Cost of goods sold/Average Inventory
$\begin{gathered}\Rightarrow \quad 4,80,000 /40,000 \\ =12 \text { times }\end{gathered}$
Cost of goods sold = Sales - G.P
$x=6,00,000-\frac{x}{4}$
$\begin{aligned} 5 x & =6,00,000 \times 4 \\ x & =4,80,000\end{aligned}$
Cost of goods sold = 4,80,000
Average Inventory
$\begin{aligned} & =\frac{28000+58000}{2} \\ & =80,000 / 2 \\ & =40,000\end{aligned}$ Hence, the correct option is 4.
Question : Opening Inventory Rs.29,000; Closing Inventory Rs.31,000; Revenue from Operations (Sales) Rs.3,20,000; Gross Profit Ratio 25% on Revenue from Operations.
Inventory Turnover Ratio will be
Option 1: 6 times
Option 2: 4 times
Option 3: 8 times
Option 4: None of the above
Question : Revenue from Operations (Sales) Rs. 16,00,000; Average Inventory Rs.2,20,000; Gross Loss Ratio 5%. Inventory turnover ratio will be
Option 1: 7.63 times
Option 2: 7 times
Option 3: 7.4
Question : _____________ratio establishes a relationship between gross profit and Revenue from Operations, i.e. Net Sales.
Option 1: Net profit ratio
Option 2: Operating profit ratio
Option 3: Gross profit ratio
Regular exam updates, QnA, Predictors, College Applications & E-books now on your Mobile