Question

 From the given information calculate the Stock turnover ratio. Sales Rs 2,00,000; G.P: 25% on cost; Stock at the beginning is 1/3 of the stock at the end which was 30% of sales. 

Answer 1

`"Stock Turnover Ratio"="Cost of Goods Sold (COGS)"/"Average Stock"` 

Sales = Rs 2,00,000

Gross Profit = 25% on cost

Let the cost = Rs 100

Gross Profit = 25% of Rs 100 = Rs 25

Sales = 100 + 25 = Rs 125 

`"Cost Of Goods Sold"=2,00,000xx100/125="Rs"1,60,000` 

Closing Stock = 30% of sales 

=`2,00,000xx30/100="Rs"  60,000` 

Opening Stock = 1/3 of the Closing Stock 

=`60,000xx1/3= "Rs" 20,000` 

`"Average Stock" = ("Opening Stock" +"Closing stock")/2=(20,000+60,000)/2=Rs 4 "times"` 

∴` "Stock Turnover Ratio"=(1,60,000)/(40,000)=4 "times"`