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A D - Loving Life (Querist)
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27 November 2008 CAlculate the inventory turnover ratio of two items & put forward ur comments
Material A Material B

Opening stock rs. 10000 rs. 9000
Purchase 52000 27000
Closing stock 6000 11000

CA.ViVeK M ACA

CA.ViVeK M ACA (Expert)
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29 November 2008 Formuale
Cost of gooods sod/ average inventories

Cost of goods sold=opening+Purchase-closing stock
A =10000+52000-6000=56000
B= 9000+27000-11000 =25000

Average inventories=opening+closing /2
A= 10000+6000/2=8000
B=9000+11000/2=10000

Inventory To Ratio
56000/8000=7 Times
25000/10000=2.5 Times

It is a ratio showing fast movement of stock.

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