Q.Cost of Revenue from operations ₹ 3,00,000; Inventory in the beginning of the year ₹ 60,000; Inventory at the close of the year ₹ 40,000. Inventory turnover ratio is :

Inventory turnover ratio = Cost of revenue from operations ÷ Average inventory = ₹3,00,000 ÷ ₹50,000 = 6 times.

Step by step:

$\text{Average Inventory} = \frac{\text{Opening} + \text{Closing}}{2} = \frac{60{,}000 + 40{,}000}{2} = 50{,}000$

$\text{Inventory Turnover Ratio} = \frac{\text{Cost of Revenue from Operations}}{\text{Average Inventory}} = \frac{3{,}00{,}000}{50{,}000} = 6 \text{ times}$

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