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Model Paper 5 — Accountancy STD 12 Commerce — Question

CBSE BoardEnglish MediumSTD 12 CommerceAccountancyModel Paper 51 Mark
MCQ
Inventory Turnover Ratio is calculated under -------
  • A
    Activity Ratio
  • B
    Profitability Ratio
  • C
    Solvency Ratio
  • D
    Liquidity Ratio
✓

Answer

(a) Activity Ratio
Explanation:
Inventory turnover ratio is calculated under the Activity Ratio.
i.e. Inventory Turnover Ratio = Cost of Revenue from operations or cost of goods sold/Average Inventory. Average inventory is used instead of ending inventory because many company's merchandise fluctuates greatly throughout the year.

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