Question

₹2,00,000 is the Cost of Revenue from Operations (Cost of Goods Sold), during the year. If Inventory Turnover Ratio is 8 times, calculate inventories at the end of the year. Inventories at the end is 1.5 times that of in the beginning.

Answer 1

Let Opening Inventory = x

Closing Inventory = 1.5 × x = 1.5 x

Opening Inventory = x = Rs 20,000

Closing Inventory = 1.5 x = 20,000 × 1.5 = Rs 30,000