11-14. If the business has a cost of goods sold of $210,000, what is the stock turnover ratio? Is this a good or bad ratio in your opinion? (AACSB: Communication; Reflective Thinking)

Stock Turnover is a way to measure stock performance. It is an indication of the number of times the stock has been “turned over” or replaced over a given period of time. This is a measurement of sales performance too, as the higher the rate, the better the stock (and the business) is performing. If the rate is low, then the stock is taking some time to sell, which means that the business has cash tied up in the stock, which affects its cash flow. In order to work out stock turnover, it is necessary to calculate the value of the opening stock and the value of the closing stock over a period of time.