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Cost and management accounting (mgt 402).........Start date : 12 may 2016.........End date : 18 may 2016 )...Marks 10

Cost & Management Accounting (MGT402)

GDB # 01

Total Marks: 10


Following are the inventory turnover ratios of Global Company, Cosmos Company, SunStar Company and Galaxy Company for the financial year 2010, 2011 and 2012. SunStar and Galaxy Company manufacture heavy machinery whereas Global and Cosmos Company are retailers of general merchandise.





Global Co.




Cosmos Co.




SunStar Co.




Galaxy Co.






Financial information of Global Company for financial year 2010 is as follows:

  • Opening inventories-----------------Rs.  30,000
  • Closing inventories------------------Rs.  41,000
  • Cost of goods manufactured-------Rs. 261,000


  1. In general, higher inventory turnover ratio indicates efficient operations carried out by an organization but a very high ratio is not considered good. Why is it so?                                                        
  2. Calculate the missing figure for inventory turnover ratio of Global Company for year 2010 with the help of given data?                                                                                                  
  3. Can we compare inventory turnover ratio of Global Company with that of SunStar and Galaxy Company? Justify your answer with logical argument.                       

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Replies to This Discussion

friends plzz share karey solution for the help of all students

inventory turn over ratio is 7.0422



          Cost of goods manufactured

  (Opening inventory + closing inventory)



  (30,000 + 41,000)


= 7.35 answer

mjo ...what is the answer of 1st question???

part b ka aap ka ghalt answer hai....aur ghalt tarikay say solve kiya hai

Zahid Usman Bhai, your view is wrong. Please refer to Handouts Lesson 5, Page 32 (snap shot) is attached. 

Just read the formula for Average Inventory and turn over ratio.

So, first part answer is 7.35 correct 100% sure.

If you have any further idea or confusion, please share it here.

cost of good sold kahan nikali hai ....kiday hai data jis ko solve kiya hai???.........ghalt hai aap ki 

bhai, agar aap se agree kiya jaye tu cost of good sold ka formula ye hai.

Opening Inventory+Inventory Purchases–Closing Inventory = Cost of Goods Sold.

Opening=30000 + 

Inventory Purchase (can we put here goods manufacture) = 261000 - 

Closing Inventory = 41000

Cost of Goods Sold = 250000

ITR = Cost of Goods Sold / Average inventory = 

ITR = 250000 / (30000+41000)/2

ITR = 250000 / 35500

ITR = 7.04

Please check and let me if this answer is correct.

ans bi thek hai aur amount bi thek hai Cost of good sold ki  bus nikalnay ka tarika thora ghalt hai

ejaz first mein explanation mangi hai ....app nay yeh calculation kahan say shuru kar dii hain ........A AND C  part mein explanation deni hai not calculations

yes junaid u r absolutely right mera bi ans yehi nikla hai

Dear please tell how you calculate 7.0422


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