Question

From the following details, calculate Inventory Turnover Ratio:

	₹
Cost of Revenue from Operations (Cost of Goods Sold)	4,50,000
Inventory in the beginning of the year	1,25,000
Inventory at the close of the year	1,75,000

Answer 1

Inventory Turnover Ratio=`"Cost of goods Sold"/"Average Stock"`

Cost of Goods Sold = 4,50,000

Average Stock = `("Opening Stock + Closing Stock")/2`

= `(125000 + 175000)/2` = 150000

Inventory Turnover Ratio = `450000/150000` = 3 times