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Question
Calculate Inventory Turnover Ratio from the data given Below:
| Inventory in the beginning of the year | Rs 20000 |
| Inventory at the end of the year | Rs 10000 |
| Purchases | Rs 50,000 |
| Carriage Inwards | Rs 5000 |
| Revenue from Operations, i.e., Sales | Rs 100000 |
State the significance of this ratio.
Solution
Cost of Goods Sold = Opening Stock + Purchases + Carriage Inwards − Closing Stock
= 20,000 + 50,000 + 5,000 − 10,000 = 65,000
Average Stock = `("Opening Stock + Closing Stock")/2`
`= (20000 + 10000)/2 = 15000`
Inventory Turnover Ratio=`"Cost of goods Sold"/"Average Stock"`
`=65000/15000 = 4.33` times
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Short Answer Question
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(a) Cash paid to Trade Payables.
(b) Purchase of Stock-in-Trade on credit.
(c) Purchase of Stock-in-Trade for cash.
(d) Payment of Dividend payable.
(e) Bills Payable discharged.
(f) Bills Receivable endorsed to a Creditor.
(g) Bills Receivable endorsed to a Creditor dishonoured.
The Quick Ratio of a company is 0.8:1. State with reason, whether the following transactions will increase, decrease or not change the Quick Ratio:
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Calculate Inventory Turnover Ratio from the following:
| ₹ | |
| Opening Inventory | 29,000 |
| Closing Inventory | 31,000 |
| Revenue from Operations, i.e., Sales | 3,20,000 |
| Gross Profit Ratio 25% | |
From the following data, calculate Inventory Turnover Ratio:
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