Question
A company has opening inventory of ₹1,50,000 and
closing inventory of ₹2,50,000. Purchases during the year were ₹10,00,000. What is the Inventory Turnover Ratio?Solution
Average Inventory = (1,50,000 + 2,50,000) / 2 = ₹2,00,000 COGS = Purchases (assuming all sold) = ₹10,00,000 ITR = COGS / Avg Inventory = 10,00,000 / 2,00,000 = 5 times
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