Question
Calculate inventory turnover ratio Revenue from
operations = 4,00,000 Average Inventory = 55,000 Gross Profit Ratio = 10%Solution
Revenue from operations = Rs. 4,00,000 Gross Profit = 10% of Rs. 4,00,000 = Rs. 40,000 Cost of Revenue from operations = Revenue from operations – Gross Profit = Rs. 4,00,000 – Rs. 40,000 = Rs. 3,60,000 Inventory Turnover Ratio = Cost of Revenue from Operations/Average Inventory = 3,60,000/55,000 = 6.55 times
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