Question 42 Chapter 4 of +2-B
Table of Contents
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 | X | 25 | |
| 100 | |||||
| = | 1 | X | |||
| 4 |
| Cost of goods sold | = | Sales – Gross Profit |
| Sales | = | Cost of goods sold + Gross Profit |
| X | + | 1 | X | = | ₹ 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
- Chapter No. 1 – Accounting Not for Profit Organisations
- Chapter No. 2 – Partnership Accounts – I (Introduction)
- Chapter No. 3 – Partnership Accounts – II (Goodwill: Nature and Valuation)
- Chapter No. 4 – Partnership Accounts – III (Reconstitution of Partnership)
- Chapter No. 5 – Partnership Accounts – IV (Admission of A Partner)
- Chapter No. 6 – Partnership Accounts – V (Retirement and Death of A Partner)
- Chapter No. 7 – Partnership Accounts – VI (Dissolution of Partnership Firm)
- Chapter No. 8 – Company Accounts (Share Capital)
- Chapter No. 9 – Company Accounts (Issue of Debentures)
- Chapter No. 10 – Company Accounts (Redemption of Debentures)
Usha Publication – Accountancy PSEB (Class 12) – Volume II – Solution
- Chapter No. 1 – Financial Statements of a Company
- Chapter No. 2 – Financial Statement Analysis
- Chapter No. 3 – Tools of Financial Statement Analysis- Comparative and Common Size
- Chapter No. 4 – Ratio Analysis
- Chapter No. 5 – Cash Flow Statement
Check out T.S. Grewal +2 Book 2020@ Official Website of Sultan Chand Publication
