Inventory Turnover Ratio shows how many times Inventories are converted into Sales (Revenue) and higher the Inventory Turnover Ratio better it is.

True

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False

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Solution

The correct option is A True
Inventory Turnover Ratio shows how many times Inventories are converted into Sales (Revenue) and higher the Inventory TurnoverRatio better it is a true statement.

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Q. Calculate Inventory Turnover Ratio from the following:

	₹
Opening Inventory	29,000
Closing Inventory	31,000
Revenue from Operations, i.e., Sales	3,20,000
Gross Profit Ratio 25%

Q. Inventory turnover ratio
= Cost of Revenue from Operations / Inventory.

Q. (i) Revenue from Operations: Cash Sales ₹4,20,000; Credit Sales ₹6,00,000; Return ₹20,000. Cost of Revenue from Operations or Cost of Goods Sold ₹8,00,000. Calculate Gross Profit Ratio.
(ii) Average Inventory ₹1,60,000; Inventory Turnover Ratio is 6 Times; Selling Price 25% above cost. Calculate Gross Profit Ratio.
(iii) Opening Inventory ₹1,00,000; Closing Inventory ₹60,000; Inventory Turnover Ratio 8 Times; Selling Price 25% above cost. Calculate Gross Profit Ratio.

Opening Inventory Rs. 29,000; Closing Inventory Rs. 31,000; Revenue from Operations (Sales) Rs. 3,20,000; Gross Profit Ratio 25% on Revenue from Operations.
Calculate:
(i) Inventory Turnover Ratio and
(ii) Average Age of Inventory.

From the following information, calculate inventory turnover ratio; Revenue from Operations (Sales) Rs. 16,00,000; Average Inventory Rs. 2,20,000; Gross Loss Ratio 5%.

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Inventory Turnover Ratio shows how many times Inventories are converted into Sales (Revenue) and higher the Inventory Turnover Ratio better it is.

The correct option is A TrueInventory Turnover Ratio shows how many times Inventories are converted into Sales (Revenue) and higher the Inventory TurnoverRatio better it is a true statement.

The correct option is A True
Inventory Turnover Ratio shows how many times Inventories are converted into Sales (Revenue) and higher the Inventory TurnoverRatio better it is a true statement.