JAMB Commerce 2018 Paper

Concept:Inventory or stock turnover measures how often a business sells and replaces its stock during a period.It is calculated as:$$\text{Rate of Turnover} = \frac{\text{Cost of Goods Sold}}{\text{Average Stock}}$$Explanation:First, find the cost of goods sold using the formula:$$\text{Cost of Goods Sold} = \text{Opening Stock} + \text{Purchases} - \text{Closing Stock}$$Substitute the values:$$5{,}600 + 9{,}700 - 4{,}400 = 10{,}900$$Next, find the average stock:$$\text{Average Stock} = \frac{\text{Opening Stock} + \text{Closing Stock}}{2}$$Substitute:$$\frac{5{,}600 + 4{,}400}{2} = \frac{10{,}000}{2} = 5{,}000$$Now calculate the rate of turnover:$$\frac{10{,}900}{5{,}000} = 2.18 \text{ times}$$Answer:The rate of turnover is $2.18$ times, which corresponds to option D.