If the opening stock of Ali ltd is N40,000, cost of goods sold is N48,000 and closing stock is N24,000, its rate of turn over will be?

A. 1.2 times
B. 1.5 times
C. 2.0 times
D. 7.5 times

Correct Answer: Option A

A. 1.2 times

Explanation

To calculate the rate of turnover, the following things are needed;

• opening stock
• closing stock
• cost of goods sold.

All this have been given in the question so we go ahead to calculate our rate of turnover.

first step is calculating the average stock which is gotten as; opening stock + closing stock / 2

Thus we have; Average stock = 40,000 + 48,000= 88,000 / 2= 44,000

rate of turnover= cost of goods sold / average stock.

24,000 / 44,000= 1.2 times