Question

Calculate Stock – Turnover ratio: 

Opening stock = Rs. 80,000; Closing stock Rs. 60,000; Purchases Rs. 1,90,000.

Answer 1

Inventory turnover ratio = (Cost if revenue from operations)/(Average inventory)

Cost of revenue from operation = Opening stock + Purchase – Closing stock

= Rs. 80,000 + 1,90,000 – 60,000 

= Rs. 2,10,000 

Average Inventory = (Opening inventory + Closing inventory)/2

= (80,000 + 60,000)/2

= 1,40,000/2

= Rs. 70,000 

Inventory Turnover Ratio = 2,10,000/70,000

= 3 times