The inventory turnover ratio is ________ ratio.

a activity

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a profitability

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an efficiency

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None of these

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Solution

The correct option is C
an efficiency

The inventory turnover ratio is an efficiency ratio.

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Similar questions

Q. Following information is given about a company:

	₹		₹
Revenue From Operations, i.e., Net Sales Gross Profit	1,50,000	Opening Inventory	29,000
Cost of Revenue From Operations	30,000	Closing Inventory	31,000
(Cost of Goods Sold)	1,20,000	Debtors	16,000

From the above information, calculate following ratios:

(i) Gross Profit Ratio,

(ii) Inventory Turnover Ratio, and

(iii) Trade Receivables Turnover Ratio.

Inventory Turnover Ratio is an activity ratio. State true or false.

A trading firm’s average inventory is Rs 20,000 (cost). If the inventory turnover ratio is 8 times and the firm sells goods at a profit of 20% on sale, ascertain the profit of the firm.

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. (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.

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The inventory turnover ratio is ________ ratio.

The correct option is C an efficiency The inventory turnover ratio is an efficiency ratio.

The correct option is C
an efficiency

The inventory turnover ratio is an efficiency ratio.