Calculate the Inventory Turnover Ratio
Inventory Turnover Ratio: COGS/Average Inventory = 6,00,000/60,000 = 10 Times COGS = Opening Stock + Purchase + Direct Expenses – Closing Stock = 20,000 + 6,30,000 + 50,000 – 1,00,000 = 6,00,000 Average Inventory = (Opening Stock + Closing Stock) / 2 = (20,000 + 1,00,000) / 2 = 60,000
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