# Question 110 Chapter 4 of +2-B – USHA Publication 12 Class Q-110- CH-4 Book 2 - Usha Pub. +2 Book 2020 - Solution

Question 110 Chapter 4 of +2-B

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

## The solution of Question 110 Chapter 4 of +2-B: –

 (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

Also, Check out the solved question of previous Chapters: –