Paper 2 · Ratios and Interpretation

In accounting, the rate of stockturn (stock turnover) is obtained by dividing cost of sales by what figure?

Model answer

average stock

Also accepted: average inventory

Explanation: Rate of stockturn = cost of sales / average stock.

Derived from ZIMSEC Principles of Accounts 7112/2 Paper 2, June 2014, Q4

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