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Retail Glossary: Stock Turnover

Retail Glossary: Stock Turnover

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The ratio of cost of goods sold over average stock (at cost). This indicates how many times, on average, the entire inventory (stock) was sold and replaced during the year. A high ratio may indicate positive factors such as good stock demand and management. A low ratio may indicate that either stock is naturally slow moving or problems such as the presence of obsolete stock.

Stock Turnover Ratio =

  Cost of Goods  
 Average Stock

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