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.
On 1st January, 2005 the Board of Directors of Paushak Limited needed to identify the amount of working capital needed to meet the programme they have arranged for the year. From t
accepted#Regarding the Overhead costs, these are allocated based on Direct Labor;
Frontier Sports sells hunting and fishing equipment and provides guided hunting and fishing trips. Frontier Sports is owned and operated by Wally Schnee, a well-known sports enthus
what are the factors should be considered before terminated the operation of a losing firm??
Characteristics of standard costing 1) Flow of information : in a standard costing system cost information flows in a straight forward manner as material is requisitioned and
Definition of accounting Accounting is the procedure of recognizing measuring and communicating economic information to allow informed judgments and decisions by the user’s inf
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
What is Budgetary control Budgetary control is the process of determining various budgeted figures for the enterprises for the future period and then comparing the budgeted fi
hello do your staff help with exams ?
A firm requires continuously monitoring and controlling its receivables to make sure that the dues are paid on the due date and no dues stay outstanding for a long period of time.
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