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    Question

    PO Ltd made total sales of  ₹1,00,00,000  for which

    the  Cost of Goods Sold  was  ₹ 70,00,000 . If the  Inventory  at end of previous year  was  ₹15,00,000  and  at end of current year   was  ₹25,00,000 , w hat is the Inventory Turnover Ratio  of PO Ltd ?   
    A 2.80 Correct Answer Incorrect Answer
    B 3.50 Correct Answer Incorrect Answer
    C 1.20 Correct Answer Incorrect Answer
    D 1.50 Correct Answer Incorrect Answer
    E 4.67 Correct Answer Incorrect Answer

    Solution

    Inventory Turnover Ratio = COGS / Avg. Inventory    Average Inventory = (15,00,000 + 25,00,000) / 2 = ₹20,00,000   
    Inventory Turnover Ratio = 70,00,000 / 20,00,000 = 3.5

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