Stock Turn Ratio
Stock turn provides an indication as to how fast or slow stock is been sold. It also indicates the efficiency of the business in terms of its control of stock levels. Assuming that gross profit percentage remains constant, a faster sale of stock will mean increases in profits from sales; likewise a slower sale of stock could mean decreases in profits.
The formula for stock turn is:
The Average stock is calculated as ( opening stock + closing stock ) ÷ 2