https://file.aiquickdraw.com/mathbot/file/17263173725722a3ynuob.jpg

To calculate the **Cost of Goods Sold (COGS)** from the information provided in the image, we can use the formula:

\[
\text{COGS} = \text{Sales} - \text{Gross Profit}
\]

Unfortunately, the image does not seem to provide direct values for **Sales** or **Gross Profit**. However, if you have these values or can estimate the Gross Profit percentage, you can easily compute the COGS.

The inventory section mentions that COGS is needed for the **Inventory Turnover Ratio** formula:

\[
\text{Inventory Turnover Ratio} = \frac{\text{Cost of Goods Sold}}{\text{Average Inventory}}
\]

Since the **Inventory Turnover Ratio** is given as 12, and the **Average Inventory** is ₹2,20,000, we can rearrange the formula to find COGS:

\[
\text{Cost of Goods Sold} = \text{Inventory Turnover Ratio} \times \text{Average Inventory}
\]

Substituting the values:

\[
\text{COGS} = 12 \times 2,20,000 = ₹26,40,000
\]

Thus, the **Cost of Goods Sold (COGS)** is ₹26,40,000.

Would you like further details or have any additional questions? Here are a few related questions for practice:

1. How is the **Gross Profit** derived from sales and COGS?
2. Can you explain the **working capital** in the context of the balance sheet provided?
3. What impact does a higher **Inventory Turnover Ratio** have on business operations?
4. How can **Debtors Turnover** influence cash flow management?
5. How would you calculate the **operating cycle** based on the available data?

**Tip**: The COGS is crucial in determining profitability and is often used to analyze business efficiency by comparing with revenues and inventory management strategies.

Learn how to calculate the Cost of Goods Sold (COGS) using the Inventory Turnover Ratio. In this example, the turnover ratio is 12, and the average inventory is ₹2,20,000. The COGS is calculated as ₹26,40,000. This concept is key in understanding inventory management and profitability analysis.

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