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 ?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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