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    Question

    MNP Inc. has Gross Profit of ₹75,000 on Sales of

    ₹3,50,000. Average Total Assets are ₹2,00,000 and Average Inventory is ₹50,000. Calculate Total Asset Turnover and Inventory Turnover.
    A 1.50 times; 3.5 times Correct Answer Incorrect Answer
    B 1.75 times; 5.5 times Correct Answer Incorrect Answer
    C 2.00 times; 5.0 times Correct Answer Incorrect Answer
    D 1.75 times; 5.0 times Correct Answer Incorrect Answer
    E 1.50 times; 5.5 times Correct Answer Incorrect Answer

    Solution

    1.      Total Asset Turnover = 𝑆𝑎𝑙𝑒𝑠 / 𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝐴𝑠𝑠𝑒𝑡𝑠 = 3,50,000/2,00,000 = 𝟏 . 𝟕𝟓 𝐭𝐢𝐦𝐞𝐬   2.      Inventory Turnover = 𝐶𝑂𝐺𝑆 / 𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 = ( 𝑆𝑎𝑙𝑒𝑠 – 𝐺 ross profit) /  average inventory = (3,50,000−75,000) / 50,000 = 2,75,000/ 50,000 = 𝟓 . 𝟓 𝐭𝐢𝐦𝐞𝐬

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