Whats the correct Stock Turnover formula!!!

System
System Posts: 100,534 🤖 Admin 🤖
edited June 18 in AAT student discussion
Can anyone put my mind at rest as the correct formula for Stock Turnover..my books are telling me STOCKS over C.O.S yet my tutor has taught me C.O.S over Stocks?? I'm confused..what should go on the top & what should go on the bottom..Help!

Comments

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Whats the correct Stock Turnover formula!!!

    Stock turover = COS/Stock

    Stock turnover period = Stock/COS x 12 or 365


    Both can be used just means that one answer gives the turover in days or months and the other number of time for stocked turnover during the year.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Whats the correct Stock Turnover formula!!!

    It makes sense now, thanks. I was about to go stomping into college & tell my tutor he's taught me the wrong thing!!
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Whats the correct Stock Turnover formula!!!

    You're supposed to use average stock, i.e. (open+close)/2. They gave you the figures for production, sales, and so on so you could calculate opening stock, but for the subsidiary it was negative. Anyone see this? :?
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Whats the correct Stock Turnover formula!!!

    Hi

    They gave you an extract from the balance sheet and it more than likely you would have needed to use this figure. Although average stock if preferably if available, you have to adapt the formulas where you have to.

    Eva

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