What is the stock turn for a store holding products to the value of £250,000 with annual sales of these products amounting to £1,000,000?

What is the stock turn for a store holding products to the value of £250,000 with annual sales of these products amounting to £1,000,000?
A . 10
B . 4
C . 0.25
D . 0.4

View Answer

Answer: B

Explanation:

Calculating Inventory Turnover (Stock Turn)

As with a typical turnover ratio, inventory turnover details how much inventory is sold over a period. To calculate the inventory turnover ratio, cost of goods (COGS) is divided by the average inventory for the same period.1

Cost of Goods Sold ÷ Average Inventory or Sales ÷ Inventory

In this exercise, the stock turn equal to sales divided by inventory, or 1,000,000:250,000 = 4.

Reference: CIPS study guide page 131

LO 2, AC 2.3