Question

Calculate Stock turnover Ratio From the data given below

$$\begin{array}{cc}\text{Items}& \text{Rs.}\\ \text{Stock at the beginning of the year}& 10,000\\ \text{Stock at the end of the year}& 5,000\\ \text{Carriage}& 2,500\\ \text{Sales}& 50,000\\ \text{Purchase}& 25,000\end{array}$$

Answer 1

$StockTurnoverRatio=\frac{CostofGoodsSold}{AverageStock}$

$CostofGoodsSold$
$=OpeningStock+Purchases+Carriage–ClosingStock$
= Rs. 10,000 + Rs. 25,000 + Rs. 2,500 – Rs. 5,000
= Rs. 32,500

$AverageStock$
$=\frac{OpeningStock+ClosingStock}{2}$
$=\frac{Rs.10,000+Rs.5,000}{2}$
$=\frac{Rs.15,000}{2}=Rs.7,500$

$StockTurnoverRatio=\frac{Rs.32,500}{Rs.7,500}=4.33times$