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Question
Average Inventory carried by a trader is ₹ 60,000; Inventory turnover ratio is 10 times. Goods are sold at a profit of 10% on cost. Find out the profit.
Numerical
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Solution
Inventory Turnover Ratio = `"Cost of Revenue from Operations"/"Average Inventory"`
10 = `"Cost of Revenue from Operations"/(₹ 60,000)`
Cost of Revenue from Operations = ₹ 60,000 × 10
= ₹ 6,00,000
Gross Profit = ₹ 6,00,000 × `10/100`
= ₹ 60,000
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