If the cost of goods sold is Rs. 1 lakh, the value of opening and closing is Rs. 20,000 and Rs. 30,000 respectively, the stock turnover ratio will be:
A. 3.3 times
B. 4 times
C. 5 times
D. 5.5 times
Answer: Option B
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To calculate the stock turnover ratio, we can use the formula:
Stock Turnover Ratio = Cost of Goods Sold / Average Stock
Average Stock = (Opening Stock + Closing Stock) / 2
Given:
Cost of Goods Sold = Rs. 1,00,000
Opening Stock = Rs. 20,000
Closing Stock = Rs. 30,000
Average Stock = (20,000 + 30,000) / 2 = Rs. 25,000
Stock Turnover Ratio = 1,00,000 / 25,000 = 4
Therefore, the stock turnover ratio is 4 times.
The correct option is B. 4 times.
Stock Turnover ratio = CGS/Avg inventory
=100000/25000
=4 times