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To analyse stocks a little further it is possible to use ratio analysis. The STOCK TURNOVER RATIO shows how many times over the business has sold the value of its stocks during the year. It is calculated by:- STOCK TURNOVER RATIO = Cost of goods sold Stocks The higher the stock turnover the better, because money is then tied up for less time in stocks. A quicker stock turnover also means that the firm gets to make its profit on the stock quicker, and so the firm should be more competitive. However, it will vary between industries and so it is important to compare within an industry. It is also possible to express the ratio as a number of days, which is sometimes an easier way to understand it. To do this use the following formula:- STOCK TURNOVER RATIO (in days) = Average Stocks ...

To analyse stocks a little further it is possible to use ratio analysis. The STOCK TURNOVER RATIO shows how many times over the business has sold the value of its stocks during the year. It is calculated by:- STOCK TURNOVER RATIO = Cost of goods sold Stocks The higher the stock turnover the better, because money is then tied up for less time in stocks. A quicker stock turnover also means that the firm gets to make its profit on the stock quicker, and so the firm should be more competitive. However, it will vary between industries and so it is important to compare within an industry. It is also possible to express the ratio as a number of days, which is sometimes an easier way to understand it. To do this use the following formula:- STOCK TURNOVER RATIO (in days) = Average Stocks ...

Assets are anything which the firm owns or has title to (in other words ownership of). Firms may have fixed assets which are long-term assets - plant, machinery and equipment, but they will also have assets which can be realised (cashed-in) in the short-term. This is generally taken in accounting terms to be less than a year. The current assets are therefore ones that can be quickly realised and change frequently. The main current assets are stock , debtors and cash . CURRENT ASSETS = Stock + Debtors + Cash They are usually shown on the top half of the balance sheet , and the current liabilities are subtracted from them to show net current assets. Source: http://www.bized.co.uk

Stocks may be held for a variety of reasons. They may be stocks of raw materials ready for production, they may be work-in-progress (production part way through the production process) or they may be stocks of finished goods. Whichever they are it is vital for the firm to control the level of stocks very carefully. Too little and they may run into production problems, but too much and they have tied up money unnecessarily. The main theories about stocks then are to do with stock control . There are various different ways to approach stock control:- Fixed re-order stock level Fixed time re-ordering Economic order quantity Just-in-time FIXED RE-ORDER STOCK LEVEL This method of stock control is where a business decides the minimum level of stocks it can tolerate, and then re-orders before the stocks reach this level. The exact timing will depend how long the stocks take to arrive. This can be illustrated as follows:- ...

Stocks are often also known as inventories. They are anything which a firm has which is not currently being used for one of the firm's functions. Most departments in the company will have stocks of something. The factory may have stocks of raw materials ready to produce, the office may have stocks of stationery and the warehouse may have stocks of finished goods. Stocks are vital to a company to help it function smoothly. If production had to be stopped every time the firm ran out of raw materials, the time wasted would cost the firm a fortune. If a shop had no stock on the shelves, customers would soon desert them. The same is true of most areas the firm operates in - I am sure you can appreciate the importance of planning ahead and having suitable levels of stocks. Stocks are considered to be current assets because many types of stocks can be converted into cash reasonably readily - particularly stocks of finished goods. However, they are generally the lea...

Stock indexes are useful for benchmarking portfolios, for generalizing the experience of all investors, and for determining the market return used in the Capital Asset Pricing Model (CAPM). A hypothetical portfolio encompassing all possible securities would be too broad to measure, so proxies such as stock indexes have been developed to serve as indicators of the overall market's performance. In addition, specialized indexes have been developed to measure the performance of more specific parts of the market, such as small companies. It is important to realize that a stock price index by itself does not represent an average return to shareholders. By definition, a stock price index considers only the prices of the underlying stocks and not the dividends paid. Dividends can account for a large percentage of the total investment return. Weighting One characteristic that varies among stock indexes is how the stocks comprising the index are weighted in the average. Even if no ex...