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      Question

      Calculate the Inventory Turnover Ratio

      Refer to the following information to answer the next 4 questions (Q15 to Q18):
      A 5 Times Correct Answer Incorrect Answer
      B 9.17 Times Correct Answer Incorrect Answer
      C 10 Times Correct Answer Incorrect Answer
      D 5.25 Times Correct Answer Incorrect Answer
      E 6 Times Correct Answer Incorrect Answer

      Solution

        Inventory Turnover Ratio: COGS/Average Inventory = 6,00,000/60,000 = 10 Times   COGS = Opening Stock + Purchase + Direct Expenses – Closing Stock             = 20,000 + 6,30,000 + 50,000 – 1,00,000             = 6,00,000   Average Inventory = (Opening Stock + Closing Stock) / 2             = (20,000 + 1,00,000) / 2             = 60,000  

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