Question

Sales of A Limited during the Year Is RS 850000. Gross Profit is RS 40000. Closing Stock
is Rs 210000, Opening Stock is Rs 130000, Calculate Stock Turnover Ratio.​

Answer 1

Answer:

4.76 times

Explanation:

COGS = Sales - Gross Profit

= 850000-40000

= 810000

Average Inventory = (opening +closing)/2

=(210000+130000)/2

=(340000)/2

=170000

stock turnover ratio = COGS/Average Inventory

=810000/170000

=4.76 times

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Answer 2

Answer:

Stock Turnover Ratio = 4.76 times

Explanation:

Given:

Sales = Rs 8,50,000

Gross Profit = Rs 40,000

Closing Stock = Rs 2,10,000

Opening Stock = Rs 1,30,000

To find :

Calculate Stock Turnover Ratio

Solution :

Stock Turnover Ratio =

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

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

Sales = Cost Of Goods Sold + Gross Profit

8,50,000 = Cost Of Goods Sold + 40,000

Cost Of Goods Sold = 8,50,000 - 40,000

Cost Of Goods Sold = Rs 8,10,000

Average Inventory =

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

$\sf{\longrightarrow{\dfrac{1,30,000 \: + \: 2,10,000}{2}}}$

$\sf{\longrightarrow{\dfrac{3,40,000}{2}}}$

Average Inventory = 1,70,000

Stock Turnover Ratio =

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

$\longrightarrow{\sf{\dfrac{8,10,000 }{1,70,000} \: = \: 4.76}}$

Stock Turnover Ratio = 4.76 times