Concept:The ratio of cost of sales to average stock measures how rapidly a business sells and replaces its stock during a period.
Explanation:The formula is given as:
Rate of Turnover=Average StockCost of SalesCost of sales means the direct cost incurred in producing or purchasing goods sold.
Average stock is the mean value of opening stock and closing stock.
Dividing these two figures gives the stock turnover rate.
This ratio is also known as stock velocity or stock turnover ratio.
It indicates the efficiency of inventory management in a business.
It does not measure profit earned or capital employed in the firm.
Therefore, gross profit, net profit, and working capital are not the results of this calculation.
Answer:C. rate of turnover