Calculate Inventory Turnover Ratio from the data given below:
| Inventory in the beginning of the year | Rs. 10,000 |
| Inventory at the end of the year | Rs. 5,000 |
| Carriage | Rs. 2,500 |
| Revenue from Operations | Rs. 50,000 |
| Purchases | Rs. 25,000 |
Inventory Turnover Ratio
Cost of Revenue from Operations = Inventory in Begining + Purchase + Carriage - Inventory at the end
= 10,000 + 25,000 + 2,500 - 5,000
= 32,500
Average Inventory
= `\frac{10,000 + 5,000}{2 } `
= 7,500
Inventory Turn Over Ratio = `\frac{32,500}{7,500 } ` = 4.33 times
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