Question

For the year ending December 2020 , a restaurant reported cost of goods sold of PHP 156, 200 and an average inventory of 5, 250 which costs PHP 26,330. Compute the annual rate of stock turnover (in pesos).

Answer 1

Answer:

The inventory turnover ratio is an important efficiency metric and compares the amount of product a company has on hand, called inventory, to the amount it sells. In other words, inventory turnover measures how many times inventory has sold during a period.

Step-by-step explanation:

Inventory turnover is a ratio that shows how many times inventory has sold during a specific period of time.

Dividing the cost of goods sold (COGS) by the average inventory during a particular period will give you the inventory turnover ratio.

1. The ratio helps the company understand if inventory is too high or low and what that says about sales relative to inventory purchased

Answer 2

Answer:

5.93x

Step-by-step explanation:

Annual Rate of stock turnover (in Pesos) = Cost of Goods Sold/Average  Inventory on Hand (in Pesos)

= Php 156,200 / Php 26,330

= 5.93x