WAEC Commerce 2016 Paper

Concept:Stock turnover rate shows how many times a business sells and replaces its stock during a period.It is calculated by dividing the cost of goods sold by the average stock.Thus, $\text{Rate of Stock Turnover} = \dfrac{\text{Cost of Goods Sold}}{\text{Average Stock}}$.Explanation:First, find the Cost of Goods Sold (COGS).$\text{COGS} = \text{Opening Stock} + \text{Purchases} - \text{Closing Stock}$$\text{COGS} = \mathrm{D}5{,}000 + \mathrm{D}30{,}000 - \mathrm{D}7{,}000 = \mathrm{D}28{,}000$The sales amount of $\mathrm{D}55{,}000$ is not used because stock turnover is based on cost price, not selling price.Second, calculate the average stock for the period.$\text{Average Stock} = \dfrac{\text{Opening Stock} + \text{Closing Stock}}{2}$$\text{Average Stock} = \dfrac{\mathrm{D}5{,}000 + \mathrm{D}7{,}000}{2} = \dfrac{\mathrm{D}12{,}000}{2} = \mathrm{D}6{,}000$Third, apply the stock turnover formula.$\text{Rate of Stock Turnover} = \dfrac{\mathrm{D}28{,}000}{\mathrm{D}6{,}000}$$\text{Rate of Stock Turnover} = 4.67$ times, which is approximately $4.7$ times.Answer:The correct option is C: $4.7$ times.