A trader's turnover was D36,000. Purchases was D28,000. The opening stock was D2,000 and the closing stock was D3,000.
What is the rate of turnover?
The inventory turnover ratio is calculated by dividing the cost of goods sold for a period by the average inventory for that period
COGS / average stock = Rate of turnover
cogs = opening stock + purchases - closing stock
2000 + 28000 - 3000 = 27000
Average stock = opening stock + closing stock / 2
2000 + 3000 / 2 = 2500
Rate of turnover = 27000/ 2500 = 10.8 times
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