Accounting for IGCSE & O level - Advanced Principles (Section 3 - No. 16)
How is the average inventory calculated for the purpose of calculating the inventory turnover ratio?
Opening Inventory + Closing Inventory / 2
Opening Inventory - Closing Inventory
Closing Inventory - Opening Inventory
Total Inventory during the year
Explanation
Average inventory is calculated as (Opening Inventory + Closing Inventory) / 2.
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