Question

From the following information, calculate Inventory Turnover Ratio:

	₹
Revenue from Operations	16,00,000
Average Inventory	2,20,000
Gross Loss Ratio 5%

Answer 1

$\begin{array}{l}\text{Cost of Revenue from Operations}=\text{Revenue from Operations}+\text{Gross Loss}\\ \text{=16,00,000+80,000}=\text{Rs 16,80,000}\\ \mathrm{Inventory}\mathrm{}\mathrm{Turnover}\mathrm{}\mathrm{Ratio}=\frac{\mathrm{Cost}\mathrm{}\mathrm{of}\mathrm{}\mathrm{Revenue}\mathrm{}\mathrm{from}\mathrm{}\mathrm{Operations}}{\mathrm{Average}\mathrm{}\mathrm{Inventory}}\\ \text{=}\frac{16,80,000}{2,20,000}=7.64\text{Times}\\ \end{array}$