# You are able to collect the following information about a company for two years:

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You are able to collect the following information about a company for two years:

Calculate Inventory Turnover Ratio and Trade Receivables Turnover Ratio

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Stock turnover Ratio = $\frac {\textit{Cost of goods sold}}{\textit{Average stock}}$

or, Cost of Revenue from Operations = Revenue from operations – Gross Profit

or, Gross Profit = 25% of Sales

= 25% of 24,00,000 = 6,00,000 or, Cost of Goods sold

= 24,00,000 – 6,00,000 = 18,00,000

Average Stock = (Opening debtors + Closing debtors/2)

Average Debtors

= (Opening Trade receviables + closing receivables/2)

Debtors Turnover Ratio

$\frac { 24,00,000 }{ 5,30,000 }$ = 4,53 times
Note: It has been assumed that all Revenue from operations are credit Revenue from operations