Inventory Turnover Ratio = (Cost of Goods Sold /Cost of Revenue from Operation)/Average Inventory
Cost of goods sold= Opening Stock + Net Purchases + Direct Expenses – Closing Stock
Cost of Revenue from Operations = Revenue from Operations – Gross Profit
Cost of Material Consumed (including direct expenses) + Change in inventories of WIP and Finished Goods
Opening Inventory + Net Purchases+ Direct Expenses – Closing inventory
Average Inventory = (Opening Inventory + Closing Inventory)/2
From the following information obtained from the books of Kundan Ltd., calculate the inventory turnover ratio for the years 2015-16 and 2016-17 :
|Inventory on 31st March||7,00,000||17,00,000|
|Revenue from operations||50,00,000||75,00,000|
(Gross profit is 25% on the cost of revenue from operations)
In the year 2015-16, inventory increased by Rs 2,00,000.
The quick ratio of a company is 1.5: 1. A state with reason which of the following transactions would
ii. decrease or
iii. not change the ratio
a. Paid rent Rs 3,000 in advance.
b. Trade receivables included a debtor Shri Ashok who paid his entire amount due Rs 9,700.
From the following information calculate inventory turnover ratio; Revenue from operations Rs.16,00,000; Average Inventory Rs.2,20,000; Gross Loss Ratio 5%.