ocr: Stocklurnover This ratio measures the average length of time that items of stock are held during a year. In order to express this period of time in days, the following formula must be used: Stock lurnover - - Closing - - Stock x365 - Cost ofGoods Sold In our example, stock turnover L E600 x365 43.8 days E5000/ Assuming that the closing stock value is typical of the average value of stocks held during the accounting period, this ratio tells us that, on average, items ofs stock are held for 43.8 days. Since money tied up in stocks is not available to earn profits in other business activities, th ...
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