Question

From the following information, calculate Inventory Turnover Ratio. Revenue from Operations: Rs.4,00,000, Average Inventory : Rs. 55,000, The rate of Gross Loss on Revenue from Operations was 10%

Answer 1

 Revenue from Operations = 4,00,000 

Gross Loss = 10% of Rs.4,00,000 = Rs. 40,000 

Cost of Revenue from Operations = Revenue from Operations + Gross Loss 

 = Rs.4,00,000 + Rs. 40,000 

 = Rs. 4,40,000 

Inventory Turnover Ratio = Cost of Goods Sold/ Average Inventory 

 = Rs.4, 40,000 / Rs. 55,000 = 8 times.