What Net Sales Are Required to Obtain a Stockturn Rate

question 98

Multiple Choice

What net sales are required to obtain a stockturn rate of 5--given an average inventory at cost of $100,000 and a gross margin of 50 percent?

• A) $100,000
• B) $1,500,000
• C) $600,000
• D) $1,000,000
• E) $400,000

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Definitions:

Periodic Inventory System

An inventory system where stock levels and cost of goods sold are calculated at the end of an accounting period, rather than updated continuously.

Net Method

An accounting method that records purchases after deducting any available discounts, directly showing the net purchase cost.

Credit Terms

Conditions under which credit will be extended to a customer, including repayment timeframe and interest rate.

Merchandise Inventory

Goods a company has in stock and available for sale, typically in a retail or wholesale setting.