The ratio expresses the speed of converting the stock into sales. In other words, how fast the stock is being converted into sales in a year? The greater the ratio of conversion leads to lesser the number of days /weeks /months required to convert the stock into sales.
Stock turnover ratio= (Cost of Goods Sold/ Average stock)
Standard norm of the ratio:
Higher the ratio is better the firm in converting the stock into sales and vice versa
The next step is to find out the number of days or weeks or months taken or consumed by the firm to convert the stock into sales volume.
Stock velocity= 365 days/52 weeks/12 months Creditors Turnover Ratio
Standard norm of the ratio
Lower the duration is better the position of the firm in converting the stock into sales and vice versa.
Accounts and Finance for Managers Related Tutorials
Accounts And Finance For Managers Tutorial
Financial Statement Analysis
Fund Flow Statement Analysis
Cash Flow Statement Analysis
Cost Accounting & Preparation Of Cost Statement
Time Value Of Money
Sources Of Long Term Finance
Capital Market Developments In India
Indian Financial System
Sebi In Capital Market Issues
Risk And Return
Cost Of Capital
Capital Structure Theories
Working Capital Management
All rights reserved © 2018 Wisdom IT Services India Pvt. Ltd
Wisdomjobs.com is one of the best job search sites in India.