Calculate inventory tnover ratio form the following information :
opening invenotry Rs 20000, purchases Rs 160000 and closing inventory Rs 60000
State giving reason which of the following transactions would(i) increase, (ii) decrease and (iii) neither increase nor decrease the inventory turnover ratio:
(a) Sale of goods for Rs 20000(Cost Rs 16000)
(b) Increase in the value of closing inventory by Rs 20000.
(c )Goods purchased for Rs 40000
(d) Purchases return Rs 1000.
(e) Goods costing Rs 5000 wiothdrawn for personal use.
(f) Goods costing Rs 10000 distributed as free samples

Explanation

Inventory Turnover Ratio =`("Cost of Revenue from operations")/("Average inventory")=(Rs 120000)/(Rs 40000)= Times`