A trader's turnover was D36,000. Purchases was D28,000. The opening stock was D2,000 and the closing stock D3,000. The average stock is

Average stock is a simple way of estimating the typical level of goods a trader held throughout a trading period, using only the stock levels at the very start and the very end of that period.

1. Opening stock: \( D2{,}000 \)
2. Closing stock: \( D3{,}000 \)
3. Average stock: \( \dfrac{D2{,}000 + D3{,}000}{2} = \dfrac{D5{,}000}{2} = D2{,}500 \)

Notice that turnover of \( D36{,}000 \) and purchases of \( D28{,}000 \) are not needed for this particular calculation; they would be relevant if the question asked for rate of stock turnover instead, but average stock depends only on the opening and closing stock figures.

A common error is to add the opening and closing stock but forget to divide by two, which would give \( D5{,}000 \), the total rather than the average; another error is picking one of the two figures alone instead of combining them.

Whenever a question gives an opening and a closing stock figure and asks for the average, add the two figures and divide by two.