"For the financial year ended as on March 31, 20XX the figures extracted from the balance sheet of Xerox Limited as under:
Opening Stock Rs 29,000; Purchases Rs 2,42,000; Sales Rs 3,20,000; Gross Profit 25% of Sales.
Stock Turnover Ratio will be" :-

A. 8 times

B. 6 times

C. 9 times

D. 10 times

Answer: Option A

Solution(By Examveda Team)

Inventory turnover ratio = cost of goods sold / average inventory at cost
cost of goods sold is 25% of sales i.e 320000 * 25 % = 8000
average inventory at cost = 31000 - 29000 = 1000.
Stock turnover ratio = 8000/1000 = 8 times.