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CMA doubts
🌟 as per ICAI module of intermediate, in cost accounting what is mean by inventory turnover ratio could you please explain me very detail and with formula
Replies (2)
Quick Summary
(a) Inventory turnover ratio: It helps management to avoid capital being locked up unnecessarily.
This ratio
reveals the efficiency of stock-keeping.
Inventory turnover ratio is given by the formula:
Cost of average stock held during the period
Cost of material consumed/Cost of average stock held during the period
Cost of average stock =
Cost of opening stock + Cost of closing stock/2
The inventory turnover ratio can be calculated (in days) as follows:
Inventory turnover ratio/
Days during the period
This will reveal the number of days for which the stocks are held.
Thank you so much ❤️
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