Question

Calculate Stock Turnover Ratio and closing stock from the following Information :

                                                                                                                           Rs.

Gross Profit                                                                                                    30,000

Rate of gross profit on sales                                                                            25%

Average Stock                                                                                                 15,000

Opening Stock : Closing Stock                                                                        1 : 2​

Answer 1

Explanation:

Stock Turnover Ratio = cost of goods sold/average stock

Gross profit = 30,000 = 25% on sales

Assume that,

Net sales = x

G.P. = 25% on sales

25% of x = 30,000

25/100x = 30,000

x = 30,00,000/25

x = 1,20,000

Net sales= 1,20,000

COGS = 1,20,000 - 30,000

COGS = 90,000

Opening Stock : Closing Stock =  1 : 2

Assume that,

opening stock = a

closing stock = 2a

Average stock = opening stock + closing stock /2

15,000 = a + 2a / 2

3a = 30,000

a =10,000

opening stock = 10,000

closing stock = 20,000

Stock Turnover Ratio = cost of goods sold/average stock

90,000/15,000 = 6 times

Hence,

Stock Turnover Ratio = 6 times

closing stock = 20,000

Answer 2

Answer:

Stock Turnover Ratio = 6 times

Closing Stock = 20,000

Explanation:

★ Stock Turnover Ratio :

Stock Turnover Ratio =

$\rm{\dfrac{Cost \: of \: Goods \: Sold}{ Average \: Stock}}$

Gross profit = 30,000

Gross Profit = 25% on sales

Let,

Net sales = y

Gross Profit = 25% on Net Sales

25 % of y = 30,000

25 / 100y = 30,000

y = 30,00,000 / 25

y = 1,20,000

Net sales= 1,20,000

Gross Profit = Net Sales - Cost Of Goods Sold

30,000 = 1,20,000 - Cost Of Goods Sold

Cost Of Goids Sold = 1,20,000 - 30,000

Cost Of Goods Sold = 90,000

Stock Turnover Ratio =

$\rm{\longrightarrow}\dfrac{Cost \: of \: Goods \: Sold}{ Average \: Stock}$

$\rm{\longrightarrow} \dfrac{90000}{15000} = 6$

Stock Turnover Ratio = 6 times

★ Closing Stock :

Opening Stock : Closing Stock =  1 : 2

Let,

Opening Stock = x

Closing Stock = 2x

Average stock =

$\rm{\longrightarrow{\dfrac{Ope.ning \: Stock \: + \: Closing \: Stock}{2}}}$

$\rm{\longrightarrow{15000 = \: \dfrac{Ope.ning \: Stock \: + \: Closing \: Stock}{2}}}$

$\rm{\longrightarrow}15,000 = \dfrac{x \: + \: 2x}{2}$

$\longrightarrow$ 3x = 30,000

$\longrightarrow$ x = 10,000

Opening Stock = 10,000

Closing Stock = 20,000

∴ Stock Turnover Ratio = 6 times

Closing Stock = 20,000