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✦ FREE LEARNING — CLASS 11 & 12 — CBSE · PSEB — ACCOUNTS · ECONOMICS · BST ✦
Revenue from Operations ₹4,00,000; Gross Profit ₹1,00,000; Closing Inventory ₹1,20,000; Excess of Closing Inventory over Opening Inventory ₹40,000. Calculate the Inventory Turnover Ratio.
Cost of Goods Sold = Sales − Gross Profit = 4,00,000 − 1,00,000 = ₹3,00,000
Let Opening Inventory = x. Closing Inventory = x + 40,000 = 1,20,000
x = ₹80,000 (Opening Inventory)
Average Inventory = (80,000 + 1,20,000) ÷ 2 = ₹1,00,000
Inventory Turnover Ratio = Cost of Goods Sold ÷ Average Inventory = 3,00,000 ÷ 1,00,000 = 3 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.85 - 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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