Loading Tutorstips...
✦ FREE LEARNING — CLASS 11 & 12 — CBSE · PSEB — ACCOUNTS · ECONOMICS · BST ✦
Advertisement
Advertisement
Advertisement
Advertisement
Question 42 Chapter 14 of Class 12 Part – 2 – 2024
III. Activity Ratios
Inventory Turnover Ratio
42. (Inventory T/O Ratio/G.P. on Cost) From the following detail, calculate the inventory turnover ratio :
| Opening Inventory | ₹ 50,000 |
| Closing Inventory | ₹ 30,000 |
| Sales (Revenue from Operation) | ₹ 10,00,000 |
| Gross Profit Ratio 25% on the cost |
| Inventory Turnover Ratio | = | Cost of goods sold |
| Average Inventory |
| Let assume the Cost of goods sold | = | X |
| Gross profit | = | X | X | 25 | |
| 100 | |||||
| = | 1 | X | |||
| 4 |
| Cost of goods sold | = | Sales – Gross Profit |
| Sales | = | Cost of goods sold + Gross Profit |
| X | + | 1 | X | = | ₹ 10,00,000 |
| 4 |
| 4x + x | = | ₹ 40,00,000 |
| 5x | = | ₹ 40,00,000 |
| x | = | ₹ 40,00,000 |
| 5 | ||
| X or Cost of goods sold | = | ₹ 8,00,000 |
| Average Inventory | = | Opening Inventory – Closing Inventory |
| 2 | ||
| = | ₹ 50,000 + ₹ 30,000 | |
| 2 | ||
| Average Inventory | = | ₹ 40,000 |
| Inventory Turnover Ratio | = | ₹ 8,00,000 |
| ₹ 40,000 | ||
| Inventory Turnover Ratio | = | 20 Times |
Question 42 Chapter 14 of Class 12 Part – 2
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.
This guide covers "Question 42 Chapter 14 of Class 12 Part – 2 – 2024", focusing on key definitions, step-by-step concepts, applications, and revision guidelines relevant to Textbook Solution.
It is primarily curated for Class 11 and Class 12 high school commerce, accounting, and economics students, as well as aspirants preparing for board exams or CA Foundation.
You can take our custom-built interactive practice quiz directly on this page to test your understanding of "Question 42 Chapter 14 of Class 12 Part – 2 – 2024" instantly.