Question

Question No. 23
• Determine stock turnover ratio if
opening stock is Rs.2,81,000/-, closing
stock is Rs.1,79,000/-. sales is
Rs.11,50,000/-, gross profit ratio is
20% on sales.
Answer​

Answer 1

Answer:

Explanation:

Solution :

★ The Stock Turnover Ratio :

$\sf{\longrightarrow{\dfrac{Cost \: Of \: Goods \: Sold}{Average \: Inventory}}}$

$\sf{\longrightarrow{\dfrac{Cost\:Of \: Goods \: Sold}{ \frac{Ope.ning \: Stock \: + \: Closing \: Stock}{2}}}}$

Gross Profit = 20% on sales

$\longrightarrow$ 11,50,000 × (20/100)

$\longrightarrow$ 2,30,000

Gross Profit = 2,30,000

Cost Of Goods Sold = Net Sales - Gross Profit

$\longrightarrow$ 11,50,000 - 2,30,000

$\longrightarrow$ 9,20,000

Cost Of Goods Sold = Rs. 9,20,000

$\sf{\longrightarrow{\dfrac{9,20,000}{ \frac{Ope.ning \: Stock \: + \: Closing \: Stock}{2}}}}$

★ Average Inventory =

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

$\sf{\longrightarrow{\dfrac{2,81,000 \: + \: 1,79,000}{2}}}$

$\sf{\longrightarrow{\dfrac{4,60,000}{2}}}$

$\longrightarrow \: 2,30,000$

Average Inventory = 2,30,000

★ The Stock Turnover Ratio =

$\sf{\longrightarrow{\dfrac{Cost \: Of \: Goods \: Sold}{Average \: Inventory}}}$

$\longrightarrow{\sf{\dfrac{9,20,000 }{2,30,000} \: = \: 4}}$

The Stock Turnover Ratio = 4 times

∴  Stock Turnover Ratio will  be  4 times .