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    Question

    Read the following information to answer the below questions: 

    Net Sales = 40,00,000 (20 % GP Element) out of which 40% is on credit. Opening Inventories were 60 % of closing inventories. Opening Receivables are 120,000.

    Calculate the Inventory turnover ratio of the company?

    A 9.52 times Correct Answer Incorrect Answer
    B 8.62 times Correct Answer Incorrect Answer
    C 7.62 times Correct Answer Incorrect Answer
    D 12.70 times Correct Answer Incorrect Answer

    Solution

    COGS/Average inventory 32,00,000 / 3,36,000 9.52 times COGS =40,00,000(Sales) less 20%(Profit element) = 32,00,000 Average inventory = 420,000(closing stock) + 60% of 420,000(opening stock) / 2 = 3,36,000

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