Ratio calculation in tax audit 3 CD

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Querist : Anonymous

Querist : Anonymous (Querist)

23 June 2011 i have a small confusion regarding calculation of stock in trade / turnover ratio, in Tax audit 3cd form.

what does the ratio represent & how to calculate?

Is it stock turnover ratio or anything else?

its urgent... pls

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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23 June 2011 It is the same thing which you have understood.

This ratio represents the movement period of inventory in your business. If the ratio is higher, it means you are required to hold stock for a longer period. Smaller ratio suggests that the movement of inventory is fast in your business as well as you do not require to maintain higher inventory.

Suppose Turnover is Rs. 80 lacs and Stock is Rs 16 lacs then 16/80 =.20 will be the result. In percentage terms it can be written as 20%.

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