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    Question

    From the following information, calculate the Inventory Turnover Ratio:

    Net Sales: ₹4,00,000

    Average Inventory: ₹55,000

    Gross Loss on Sales: 10%

    A 6 times Correct Answer Incorrect Answer
    B 7 times Correct Answer Incorrect Answer
    C 8 times Correct Answer Incorrect Answer
    D 9 times Correct Answer Incorrect Answer
    E 10 times Correct Answer Incorrect Answer

    Solution

    The Inventory Turnover Ratio is calculated using the formula: Inventory Turnover Ratio = Cost of Revenue from Operations / Average Inventory Calculation of Gross Loss: Gross Loss = 10% of Net Sales = 10% of ₹4,00,000 = ₹40,000 Calculation of Cost of Revenue from Operations: Cost of Revenue from Operations = Net Sales + Gross Loss Cost of Revenue from Operations = ₹4,00,000 + ₹40,000 = ₹4,40,000 Inventory Turnover Ratio = ₹4,40,000 / ₹55,000 = 8 times

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