CMA doubts

(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 ❤️