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?
A. 13.5 times B. 10.8 times C. 9 times D. 5.4 times
Correct Answer: B
Explanation
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
