Q.A firm's Cost of Goods Sold for the year ended 31st March 2026 was ₹7,00,000. Its Opening Stock was ₹60,000 and Closing Stock ₹80,000 (as given in Practical Problem 3 above). Compute the Stock Turnover Ratio.

Average Stock is found first, then Cost of Goods Sold is divided by it.

Step 1 — Average Stock:

Average Stock = (Opening Stock + Closing Stock) ÷ 2 = (60,000 + 80,000) ÷ 2 = 1,40,000 ÷ 2 = ₹70,000.

Step 2 — Stock Turnover Ratio:

Stock Turnover Ratio = Cost of Goods Sold ÷ Average Stock = 7,00,000 ÷ 70,000 = 10 times. …

A common error is dividing Cost of Goods Sold by the CLOSING Stock figure alone (₹80,000) instead of the AVERAGE of Opening and Closing Stock (₹70,000) — Average Stock is always used un …