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प्रश्न
What is the inventory conversion period? How is it calculated?
उत्तर
The inventory conversion period is the time taken to sell the inventory. A shorter inventory conversion period indicates more efficiency in the management of inventory. It is computed as follows:
Inventory conversion period (in days) = `"Number of days in a year"/"Inventory turnover ratio"`
Inventory conversion period (in months) = `"Number of months in a year"/"Inventory turnover ratio"`
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| Balance Sheet (of James Ltd.) as on 31.03.2018 |
|
| Particulars | Amount ₹ |
| I EQUITY AND LIABILITIES | |
| 1. Shareholders Funds | |
| (a) Share capital | |
| Equity share capital | 2,50,000 |
| 6% Preference share capital | 2,00,000 |
| (b) Reserves and surplus | 1,50,000 |
| 2. Non-current Liabilities | |
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| 3. Current Liabilities | |
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| Total | 12,00,000 |
| II ASSETS | |
| 1. Non-current assets | |
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| (d) Other current assets | |
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