From the following information obtained from the books of Kundan Ltd., calculate the inventory turnover ratio for the years 2015-16 and 2016-17:

Year	Inventory on 31st March	Revenue from operations
2015-16	Rs. 7,00,000	Rs. 50,00,000
2016-17	Rs. 17,00,000	Rs. 75,00,000

Inventory Turnover Ratio = Cost of goods sold (COGS) / Average Inventory

To calculate the inventory turnover ratio, we first need to determine the Cost of Goods Sold (COGS) for each year. We are given the revenue from operations and the gross profit margin (25%).

2015-16:

• Revenue from operations = Rs. 50,00,000
• Gross Profit = 25% of Revenue = 0.25 * 50,00,000 = Rs. 12,50,000
• Cost of Goods Sold (COGS) = Revenue - Gross Profit = 50,00,000 - 12,50,000 = Rs. 37,50,000
• Average Inventory = (Opening Inventory + Closing Inventory) / 2. We are only given the closing inventory (Rs. 7,00,000). We need to assume that the opening inventory for 2015-16 is zero for this calculation or the value is not provided to calculate the ratio.
• Assuming opening inventory is zero. Average Inventory = (0 + 7,00,000) / 2 = Rs. 3,50,000
• Inventory Turnover Ratio (2015-16) = 37,50,000 / 3,50,000 = 10.71

2016-17:

• Revenue from operations = Rs. 75,00,000
• Gross Profit = 25% of Revenue = 0.25 * 75,00,000 = Rs. 18,75,000
• Cost of Goods Sold (COGS) = Revenue - Gross Profit = 75,00,000 - 18,75,000 = Rs. 56,25,000
• Average Inventory = (Opening Inventory + Closing Inventory) / 2 = (7,00,000 + 17,00,000) / 2 = Rs. 12,00,000
• Inventory Turnover Ratio (2016-17) = 56,25,000 / 12,00,000 = 4.69

Therefore:

• Inventory Turnover Ratio (2015-16) = 10.71 (assuming opening inventory for 2015-16 is zero)
• Inventory Turnover Ratio (2016-17) = 4.69