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    Question

    From the following given information, calculate

    inventory turnover ratio: Revenue from operations = Rs.200,000 Average Inventory = Rs.20,000 Gross Profit Ratio = 20%
    A 10 Correct Answer Incorrect Answer
    B 12.5 Correct Answer Incorrect Answer
    C 50 Correct Answer Incorrect Answer
    D 2 Correct Answer Incorrect Answer
    E 8 Correct Answer Incorrect Answer

    Solution

    Inventory turnover is a ratio showing how many times a company's inventory is sold and replaced over a period of time. Inventory Turnover equals to Cot of Goods Sold (COGS)/Average Inventory In the example COGS = 200,000 * (1-0.2) = 160,000 Inventory turnover is a ratio = 160,000/20,000= 8

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