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    Question

    Calculate inventory turnover ratio Revenue from

    operations = 4,00,000 Average Inventory = 55,000 Gross Profit Ratio = 10%
    A 6 Correct Answer Incorrect Answer
    B 6.55 Correct Answer Incorrect Answer
    C 7 Correct Answer Incorrect Answer
    D 7.5 Correct Answer Incorrect Answer
    E 8 Correct Answer Incorrect Answer

    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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