CBSE 2024, Set 2

Question

Calculate the 'Inventory Turnover Ratio' from the following information:
Revenue from operations: ₹15,00,000
Gross profit: 20%
Opening inventory: ₹2,00,000
Purchases: ₹18,00,000

Edvaya · Accepted Answer

The correct answer is Subjective. **1. Calculation of Cost of Revenue from Operations (COGS):** Gross Profit = 20% of Revenue from Operations $ = 20\% 	ext{ of } 15,00,000 = 	ext{₹}3,00,000 $. Cost of Revenue from Operations = Revenue from Operations - Gross Profit $ = 15,00,000 - 3,00,000 = 	ext{₹}12,00,000 $. **2. Calculation of Closing Inventory:** Cost of Revenue from Operations = Opening Inventory + Purchases - Closing Inventory $ 12,00,000 = 2,00,000 + 18,00,000 - 	ext{Closing Inventory} $ Closing Inventory = $ 20,00,000 - 12,00,000 = 	ext{₹}8,00,000 $. **3. Calculation of Average Inventory:** Average Inventory = (Opening Inventory + Closing Inventory) / 2 $ = (2,00,000 + 8,00,000) / 2 = 	ext{₹}5,00,000 $. **4. Calculation of Inventory Turnover Ratio:** Inventory Turnover Ratio = Cost of Revenue from Operations / Average Inventory $ = 12,00,000 / 5,00,000 = 2.4 	ext{ times} $.

Edvaya Target

Edvaya Aspire

Take a Free Mock Test

Target Subjects

Aspire Subjects

Subject Mastery

Accountancy > Financial Statements Analysis > Accounting Ratios

Keep Practicing

Current Question

Community Stats

Track Your Progress

Edvaya Target

We Value Your Privacy