Share

# Calculate Inventory Turnover Ratio from the Data Given Below: - Accountancy

ConceptTypes of Ratios

#### Question

Calculate Inventory Turnover Ratio from the data given below:

 Rs Inventory in the beginning of the year 10,000 Inventory at the end of the year 5,000 Carriage 2,500 Revenue from Operations 50,000 Purchases 25,000

#### Solution

"Inventory turnover ratio" = "Cost of Revenue from operations"/"Average Inventor"

"Cost of revenue from operations" = "Inventory in the begining + Purchases + Carriage - Inventory at the end"

=10,000 + 25,000 + 2,500 - 5,000

=32,500

"Average Inventory" = "Inventory in the begining + Inventory at the end"/2

= (10,000 + 5,000)/2

= 7,500

"Inventory Turnover Ratio" = "32,500"/"7,500" = 4.33 "times"

Is there an error in this question or solution?

#### APPEARS IN

Solution Calculate Inventory Turnover Ratio from the Data Given Below: Concept: Types of Ratios.
S