Stock Turnover Ratio

Stock Turnover Ratio = Cost of Goods Sold
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                          Average Stock
Average Stock = Opening Stock + Closing Stock
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                            2

This ratio indicates the relationship between cost of goods sold to average stock.

This ratio gives the number of times the stock is replaces during the given period, It is important because it depends upon the movement of sales or turnover. higher the rate of turnover, shorter would be the investment in stock.

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