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✦ FREE LEARNING — CLASS 11 & 12 — CBSE · PSEB — ACCOUNTS · ECONOMICS · BST ✦
From the following information, calculate the Inventory Turnover Ratio:
| Particulars | Amount (₹) |
|---|---|
| Revenue from Operations | 16,00,000 |
| Average Inventory | 2,20,000 |
| Gross Loss Ratio 5% | |
Since the company incurred a Gross LOSS (sold below cost), Cost of Revenue from Operations exceeds Revenue by the loss amount:
Gross Loss = 5% of 16,00,000 = ₹80,000
Cost of Revenue from Operations = Revenue from Operations + Gross Loss = 16,00,000 + 80,000 = ₹16,80,000
Inventory Turnover Ratio = Cost of Revenue from Operations ÷ Average Inventory = 16,80,000 ÷ 2,20,000 = 7.64 times
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 "T.S. Grewal Class 12 Vol 3 Chapter 4 Q.84 - Accounting Ratios", focusing on key definitions, step-by-step concepts, applications, and revision guidelines relevant to Chapter 4 - Accounting Ratios.
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.
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