The correct answer is: A. Quantity of material used in a given period.
Stock turnover ratio is a measure of how efficiently a company manages its inventory. It is calculated by dividing the cost of goods sold by the average inventory. A higher stock turnover ratio indicates that a company is selling its inventory more quickly, which can be a sign of good management.
The quantity of material used in a given period is the most relevant measure for calculating stock turnover ratio because it reflects the amount of inventory that is actually being sold. The quantity of material purchased in a given period is not as relevant because it includes both inventory that is sold and inventory that is held in reserve. The quantity of material produced in a given period is also not as relevant because it includes inventory that is not yet sold.
Here is a more detailed explanation of each option:
- A. Quantity of material used in a given period: This is the most relevant measure for calculating stock turnover ratio because it reflects the amount of inventory that is actually being sold. A higher quantity of material used in a given period indicates that a company is selling its inventory more quickly, which can be a sign of good management.
- B. Quantity of material purchased in a given period: This is not as relevant a measure as the quantity of material used in a given period because it includes both inventory that is sold and inventory that is held in reserve. A higher quantity of material purchased in a given period does not necessarily mean that a company is selling its inventory more quickly.
- C. Quantity of material produced in a given period: This is also not as relevant a measure as the quantity of material used in a given period because it includes inventory that is not yet sold. A higher quantity of material produced in a given period does not necessarily mean that a company is selling its inventory more quickly.