What is stock turn over ratio? How can it calculate?

Stock Turnover

Stock turnover is more commonly known as inventory turnover

It's a ratio showing how many times a company's inventory is sold and replaced over a period of time

 

Stock turnover rate is considered to be a measure of sales performance; usually the higher the stock turnover rate, the better your stock/business is performing

The lower the rate, the longer the stock is taking to turn over. Funds are invested in stock for longer periods, which, in turn, has an adverse effect on cash flow

 

 

Inventory turnover ratio=sales over ending inventory

Inventory turnover is a ratio showing how many times a company's inventory is sold and replaced over a period of time. The days in the period can then be divided by the inventory turnover formula to calculate the days it takes to sell the inventory on hand. It is calculated as sales divided by average inventory

how many times a company's inventory is sold and replaced over a period of time

 it is calculated  as the following

Cost of Goods Sold ÷ Average Inventory

Or

Sales ÷ Inventory

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The inventory turnover ratio is an efficiency ratio that shows how effectively inventory is managed by comparing cost of goods sold with average inventory for a period. This measures how many times average inventory is "turned" or sold during a period. In other words, it measures how many times a company sold its total average inventory dollar amount during the year. A company with $1,000 of average inventory and sales of $10,000 effectively sold its 10 times over, and it is calculate by dividing cost of sales / average inventory stock for the same period

 

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This ratio is an estimate of the average time that inventory is held before it is used or sold. 

 

Inventory turnover = inventory/cost of sales ×365 days.

In theory, inventory should be the average of inventory during the year. This is the average of the inventory at the beginning of the year and the inventory at the end of the year. However, the value for inventory at the end of the year is also commonly used.

It's calculating by dividing cost of goods sold for a period by the average inventory for that period_It is a ratio showing how many times company's inventory is sold and replaced over a period of time