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A trader carries an average inventory …

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A trader carries an average inventory of ₹40,000. His inventory turnover Ratio is 8 times. If he sells goods at a profit of 20% on revenue from operations, find out his profit.

Posted by Drishti Khanna 1 year, 8 months ago

CBSE > Class 12 > Accountancy

1 answers

Preeti Dabral 1 year, 8 months ago

Inventory turnover = {tex}\frac{cost of goods sold}{average inventory}{/tex}
8 = {tex}\frac{cost of goods sold}{40000}{/tex}
cost of goods sold = 3,20,000
{tex}\therefore{/tex} profit of 25% on cost of goods sold (since 20% on sales)
{tex}\therefore{/tex} gross profit = 3,20,000 {tex}\times{/tex} 25%
= Rs.80,000

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