Numerical - Calculate stock turnover ratio for given opening & closing stock, sales & profit ratio

Q.  Determine stock turnover ratio if, Opening stock is Rs 31,000, Closing stock is Rs 29,000, Sales is Rs 3,20,000 and Gross profit ratio is 25% on sales.
- Published on 14 Sep 15

a. 31 times
b. 11 times
c. 8 times
d. 32 times

ANSWER: 8 times

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    Discussion

  • Juvairiya   -Posted on 12 Feb 18
    inventory turnover ratio = Cost of goods sold/Avg inventory
    Here, G/P ratio =25% on sales , so G/P is 80000
    Cost of goods sold = sales-g/p, 320000-80000=240000
    Avg inventory= (31000+29000)/2= 30000
    Inventory turnover ratio = 240000/30000 = 8 Times
  • khalid   -Posted on 19 Dec 17
    average inventory at cost difference comes to 2000 instead of 1000
    25% of sales comes to 80000 instead of 8000
    If these be the figures, answer is not 8 rather its 40
    comments are invited please.
  • jethan gowda A   -Posted on 27 Apr 17
    inventory turnover ratio=cost of goods sold/average inventory at cost
    cost of goods sold is 25% of sales i.e 320000*25%=8000
    average inventory at cost, 31000-29000=1000.
    8000/1000=8 times

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