From the following information of Ajanta Ltd., calculate 'Inventory Turnover Ratio' : ? Opening inventory $\displaystyle 19,000$ Closing inventory $\displaystyle 21,000$ Purchases $\displaystyle 80,000$ Wages $\displaystyle 9,000$ Carriage Outwards $\displaystyle 2,000$ Return Outwards $\displaystyle 1,000$ Revenue from operations $\displaystyle 80,000$ Carriage inwards $\displaystyle 4,000$ Rent paid $\displaystyle 5,000$

Inventory Turnover Ratio = Cost of Revenue from Operations/ Average Inventory… ½ Average Inventory = (Opening inventory + Closing inventory)/ $\displaystyle 2$ = (₹$\displaystyle 19,000$ + ₹$\displaystyle 21,000$)/$\displaystyle 2$ = ₹$\displaystyle 20,000$ …………………………………………………………. $\displaystyle 1$ Cost of Revenue from Operations = Opening Inventory + Net purchases + Direct Expenses – Closing Inventory = ₹$\displaystyle 19,000$ + (₹$\displaystyle 80,000$ – ₹$\displaystyle 1,000$) + (₹$\displaystyle 9,000$ + ₹$\displaystyle 4,000$) -₹$\displaystyle 21,000$ = ₹$\displaystyle 90,000$………………………………………… $\displaystyle 1$ Inventory Turnover Ratio = ₹$\displaystyle 90,000$/₹$\displaystyle 20,000$ = $\displaystyle 4.5$ times…………………………………………………. ½