Riaz holds average inventory of 36,000 at cost, with an inventory turnover of 5 times. If gross profit is 25% of sales, what are total sales?
Correct answer A. 2,40,000
Explanation
Cost of goods sold is 36,000 times 5, which equals 1,80,000; with gross profit at 25% of sales, cost is 75% of sales, so sales equal 1,80,000 divided by 0.75, or 2,40,000.
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