Question

Calculate inventory Turnover Ratio from the data given below: Inventory in the beginning of the year Rs. 10,000 Stock at the end of the year Rs. 5,000 Carriage Rs. 2,500 Revenue from Operations Rs. 50,0130 Purchases Rs. 25,000

Answer 1

Stock Turnover Ratio = \(\frac {\textit{Cost of Goods sold}}{\textit{Average stock}} \)

Cost of Goods Sold = Opening Stock + Purchases + Carriage – Closing Stock 

= 10,000 + 25,000 + 2,500-5,000 = 32,500

Average stock = (Opening stock + Closing stock/2)

Stock turnover ratio =  

= 4.33 times