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Sales 600000 gross margin 200000 beginning inventory 1000000 ending inventory 600000

Inventory turnover will be A-40% B-50% C-30% D-60%

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Question added by Ahmed kandil , Cost Controller , Battour Holding Cpompany
Date Posted: 2015/03/29
rohit mehra
by rohit mehra , Group GM - Finance and accounts , Sun and Sand Group

Inventory ratio indicates that how efficiently a company is turning its inventory into sales. The formula of calculating inventory ratio is : Cost of goods sold / average inventory

cost of goods sold = Sales - Gross margin =600000 -200000 =400000

Average stock = (opening stock + closing stock) /2 = (1000000 +600000)/2 =1600000/2 =800000

Inventory ratio =400000 /800000 =50%

Deleted user
by Deleted user

Inventory turnover ration=cost of goods sold/average inventory at cost/2

 

Here is a illustration

=400000

1600000/2=800000

400000/800000=50%

Answer is B-50%

Mark Angelo Damuag
by Mark Angelo Damuag , Financial Analyst , Evacare Management Consultancy Inc

Inventory turnover will be B-50%

georgei assi
by georgei assi , مدير حسابات , المجموعة السورية

I agree with Mr. Rohit answer correct answer50%