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If the cost of goods sold is Rs. 1 Lakh and the opening and closing stocks are Rs. 20,000 and Rs. 30,000 respectively, what will be the stock turnover ratio ?
Given Information:Cost of Goods Sold = Rs. 100000Opening Stock = Rs. 20000Closing Stock = Rs. 30000To Find:Stock Turnover RatioFormula:Stock Turnover Ratio = Cost of Goods Sold ÷ Average InventoryAverage Inventory = (Opening Stock + Closing Stock) ÷ 2Solution:Average Inventory = (Opening Stock + Closing Stock) ÷ 2 = (20000 + 30000) ÷ 2 = 50000÷ 2 = Rs. 25000Stock Turnover Ratio = Cost of Goods Sold ÷ Average Inventory = 100000 ÷ 25000 = 4 timesTherefore, if the cost of goods sold is Rs. 1 Lakh and the opening and closing stocks are Rs. 20,000 and Rs. 30,000 respectively, the stock turnover ratio will be 4 times.
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