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The formula that helps to calculate the ratio is: Stock Turnover Ratio Formula = Cost of Goods Sold /Average Inventory. Where, The cost of goods sold equals Opening stock + Purchases Less Closing Stock. The cost of sales can replace the cost of goods sold. Average inventory is the mean of opening stock and closing stock.
Calculate the stock or inventory turnover ratio from the below information. Cost of Goods Sold – 6,00,000. Stock at beginning of period – 2,00,000, Stock at end of period – 4,00,000. Average Inventory = (2,00,000 + 4,00,000)/2 = 3,00,000. Stock Turnover Ratio = (COGS/Average Inventory) = (6,00,000/3,00,000) =2/1 or 2:1
May 2, 2024 · Stock Turnover Ratio = Cost of Goods Sold (COGS) ÷ Average Inventory. The calculation of the stock turnover ratio consists of dividing the cost of goods sold (COGS) incurred by the average inventory balance for the corresponding period.
Sep 16, 2024 · Inventory turnover ratio measures how efficiently a company uses its inventory by dividing the cost of goods sold by the average inventory value during a set period.
Jul 26, 2023 · The formula for a stock turnover ratio can be derived by dividing the cost of goods sold incurred by the company during a given period of time by the average inventory held during the same period. The mathematical representation of the formula is: Stock Turnover Ratio = Cost of Goods Sold / Average Inventory.
Feb 7, 2024 · The formula used to calculate a company’s inventory turnover ratio is as follows. Inventory Turnover Ratio = Cost of Goods Sold (COGS) ÷ Average Inventory. While COGS is pulled from the income statement, the inventory balance comes from the balance sheet.
The inventory turnover ratio, also known as the stock turnover ratio, is an efficiency ratio that measures how efficiently inventory is managed. The inventory turnover ratio formula is equal to the cost of goods sold divided by total or average inventory to show how many times inventory is “turned” or sold during a period.
