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Question 110 Chapter 14 of Class 12 Part – 2 – 2024
Miscellaneous (Analytical Questions)
110. (Operating Ratio/Inventory T/O Ratio) From the following information calculate
(a) Operating Ratio (b) Inventory Turnover Ratio
| ₹ | ₹ | ||
| Opening Inventory | 5,00,000 | Interest Charges | 1,80,000 |
| Fixed Assets | 5,25,000 | Current liabilities | 6,00,000 |
| Cost of goods sold (i.e. Cost of Revenue from Operation) | 18,00,000 | Current Assets | 9,75,000 |
| Net Sales (Revenue from Operation) | 30,00,000 | Closing Inventory | 7,00,000 |
| Operating Expenses | 4,80,000 |
| (a) Operating Ratio | = | Operating Cost | X | 100 |
| Net Sales | ||||
| = | ₹ 22,80,000 | X | 100 | |
| ₹ 30,00,000 | ||||
| = |
76% |
| (b) Inventory Turnover Ratio | = | Cost of goods sold |
| Average Inventory | ||
| = | ₹ 18,00,000 | |
| ₹ 6,00,000 | ||
| = | 3 times |
Working Notes :
| Operating Cost | = | Cost of goods sold + Operating Expenses |
| = | ₹ 18,00,000 + ₹ 4,80,000 | |
| = | ₹ 22,80,000 |
| Average Inventory | = | Opening Inventory + Closing Inventory |
| 2 | ||
| = | ₹ 5,00,000 + ₹ 7,00,000 | |
| 2 | ||
| = | ₹ 6,00,000 |
Accounting & Commerce Educator
Sarbjit Singh holds a B.Com and M.Com degree and has over 12 years of teaching experience in double entry bookkeeping, financial accounting, and business studies.
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