A firm's inventory turnover (IT) is 5 times on a cost of goods sold of Rs. 8,00,000. If the IT is…
Rs. 60,000 is released from inventory. Average inventory initially equals \(8,00,000/5\) \(=\text{Rs. }1,60,000\), and after the improvement it equals \(8,00,000/8\)…
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A firm's inventory turnover (IT) is 5 times on a cost of goods sold of Rs. 8,00,000. If the IT is improved to 8 times while the COGS remains the same, a substantial amount of funds is released from or additionally invested in inventory. In fact,
Answer and explanation
Correct answer C
Rs. 60,000 is released from inventory. Average inventory initially equals , and after the improvement it equals . The reduction is Rs. 60,000.
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Telangana SET (TG SET)