Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Stock turnover ratio
Meaning: this ratio establishes a relation ship between costs of goods sold and average inventory.
Objective: the objective of component of this ratio is to determine the efficiency with which the inventory is utilized.
Components: there are two components of this ratio which are as under:
Cost of goods sold
Average inventory
Computation: this ratio is computed by dividing the cost of goods sold and average inventory. This ratio is usually expressed as x number of times. In the form of a formula this ratio may be expressed as under:
Stock turnover ratio = cost of goods sold/ average inventory
Cost of goods sold = sales - gross profit
Note:
If opening stock is not known closing stock can be taken.
If there is any complexity in calculating cost of goods sold then.
Interpretation: It shows the speed with which the inventory is converted into sales. In general a high ratio indicates efficient performance since an improvement in the ratio shows that either the same volume of sales has been maintained with a lower investment in stock or the volume of sales has increased without any increase in the amount of stocks. However too high ratio and too low ratio call for further investigation. A too high ratio may be the result of a very low inventory levels which, ay result in frequent stock outs and thus the firm may incur high stock out costs. On the other hand a too low ratio may be the result of excessive inventory level slow moving or obsolete inventory and thus the firm incurs high carrying costs. Therefore a firm should have neither a very high not a very low stock turnover ratio it should have a adequate level.
Non-zero lead time (determining reorder point) This basic EOQ model assumes that the suppliers lead time is zero (i.e. goods are delivered immediately on the day the order was
Advance Factoring and Maturity Factoring: In both recourse and non-recourse factoring whether the factor advances cash against book debts to the client instantly on assignment
Question 1: (a) Discuss the main features and problems which Mauritius has to face as a small island developing country. (b) What are the factors which have led to the f
Disadvantages of Simulation 1) Although all models are simplification of reality, they may still be complex and require a substantial amount of managerial and technical time.
engineering method of cost estimation
What is Zero bases budgeting (ZBB) Meaning and definition Zero base budgeting is a management tool for providing a sys tem for a careful consideration of actual in
Assumption of break even analysis The break even analysis is based upon the following assumptions : 1) All elements of cost, i.e., production , administration and selling di
Prepare cash budget?
VALUE CHAIN ANALYSIS Every firm is a collection of activities that are executed to design, generate, market, deliver and support its products or services. Value chain analysis
prepare all budgets
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +91-977-207-8620
Phone: +91-977-207-8620
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd