STATEMENT OF PROFIT AND LOSS for the year ended 31st March, 2019
| Particulars | Note No. | Amount (Rs.) |
| I. Revenue from Operations (Net Sales) | 6,00,000 | |
| II. Expenses: | ||
| (a) Purchases of Stock-in-Trade | 3,00,000 | |
| (b) Change in Inventory of Stock-in-Trade | 1 | 50,000 |
| (c) Employees Benefit Expenses | 60,000 | |
| (d) Other Expenses | 2 | 45,000 |
| Total Expenses | 4,55,000 | |
| III. Profit before Tax (I-II) | 1,45,000 | |
| IV. Less: Tax | 45,000 | |
| V. Profit after Tax (III-IV) | 1,00,000 |
Notes to Accounts
| Particulars | Amount (Rs.) |
| I. Change in Inventory of stock-in-Trade | |
| Opening Inventory | 1,25,000 |
| Less: Closing Inventory | 75,000 |
| 50,000 | |
| 2. Other Expenses | |
| Carriage Inwards | 15,000 |
| Miscellaneous Expenses | 30,000 |
| 45,000 |
SOLUTION
Cost of Goods Sold = Opening Inventory + Purchases + Direct Expenses – Closing Inventory
= 1,25,000 + 3,00,000 + 15,000 – 75,000
= Rs. 3,65,000
Average Stock = Opening Stock + Closing Stock / 2
= 1,25,000 + 75,000 / 2
= 2,00,000 / 2
= 1,00,000
Inventory Turnover Ratio = Cost of Goods Sold / Average Inventory
= 3,65,000 / 1,00,000
= 3.65 times