Question 42 Chapter 4 of +2-B

Question 42 Chapter 4 of +2-B

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 

 

The solution of Question 42 Chapter 4 of +2-B: – 

Inventory Turnover Ratio=Cost of goods sold
Average Inventory
Let assume the Cost of goods sold=X
Gross profit=X X25
100
      
 =1X  
 4  
Cost of goods sold=Sales – Gross Profit
Sales=Cost of goods sold + Gross Profit
X+1X=₹ 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

 

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

Usha Publication – Accountancy PSEB (Class 12) – Volume I – Solution

Usha Publication – Accountancy PSEB (Class 12) – Volume II – Solution

Check out T.S. Grewal +2 Book 2020@ Official Website of Sultan Chand Publication

2 Book 3 min 225x300 - Question 42 Chapter 4 of +2-B  - USHA Publication  12 Class
T.S. Grewal’s Analysis of Financial Statements

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