Why we consider cogs for calculating inventory turnover ratio. Cogs include other direct expenses like carriage, wages etc.why we can’t use opening stock +purchases-closing stock for inventory turnover ratio
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ITR mei cogs makes sense because see inventory is mostly measured at cost and cogs gives us cost only na cause cogs hoti kya hei cost of goods sold so it makes sense to include all direct expenses like wages etc.. but keep in mind to take average inventory where ever opening and closing is given as ITR is a mixed ratio….
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Thank you sir
I got my doubt clear