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✦ FREE LEARNING — CLASS 11 & 12 — CBSE · PSEB — ACCOUNTS · ECONOMICS · BST ✦
₹2,00,000 is the Cost of Revenue from Operations (Cost of Goods Sold) during the year. If the Inventory Turnover Ratio is 8 times, calculate the inventories at the end of the year. Inventory at the end is 1.5 times that at the beginning.
Average Inventory = Cost of Goods Sold ÷ Inventory Turnover Ratio = 2,00,000 ÷ 8 = ₹25,000
Let Opening Inventory = x. Closing Inventory = 1.5x.
Average Inventory = (x + 1.5x) ÷ 2
25,000 = 2.5x ÷ 2
2.5x = 50,000
x = ₹20,000 (Opening Inventory)
Closing Inventory = 1.5 × 20,000 = ₹30,000
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.
This guide covers "T.S. Grewal Class 12 Vol 3 Chapter 4 Q.87 - 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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