Riaz maintains an average inventory valued at ₹36,000 (cost price) with an inventory turnover ratio of 5. Given that the company achieves a gross profit margin of 25% on its sales, calculate the total sales revenue.

Explanation

To find total sales, first determine the Cost of Goods Sold (COGS) using inventory turnover: COGS = Average Inventory × Inventory Turnover = ₹36,000 × 5 = ₹180,000. Since gross profit is 25% of sales, cost price accounts for 75% of sales. Therefore, Sales = COGS ÷ 0.75 = ₹180,000 ÷ 0.75 = ₹240,000.