O'Reilly logo

Ratios Made Simple: A beginner's guide to the key financial ratios by Robert Leach

Stay ahead with the world's most comprehensive technology and business learning platform.

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, tutorials, and more.

Start Free Trial

No credit card required

7. Efficiency Ratios

7.1: Stock Turn

Definition

Stock turn = sales ÷ closing stock

Sales is the revenue from selling goods and services (as explained in Chapter 4).

Stock is the value of goods held for sale at the end of the accounting period (as explained in Chapter 6).

Understanding stock turn

Stock turn is a measure of business efficiency. The number indicates how many times the company sells a stock item during the course of an accounting period. This is sometimes expressed in the form of stock days (explained below). The higher the number, the more efficient is the business.

Suppose a company has sales of £100 million and closing stock of £10 million; its stock turn is 10. This means that, on average, the company will buy ...

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, interactive tutorials, and more.

Start Free Trial

No credit card required