82 BULLETIN 1317, U. S. DEPARTMENT OF AGRICULTURE 
6 per cent of sales; and the difference in the interest expense be- 
tween concerns with a rapid stock turn and those with a slow stock 
turn may easily be sufficient to determine the difference between a 
net profit and a net loss. 3 In the retail shoe trade the usual rate of 
stock turn is between once and twice a year ; and interest on invest- 
ment is approximately 3 per cent of sales. In this trade also, in- 
terest expense, varying with the rate of stock turn, is a large ele- 
ment in determining whether the business shall show a profit or a 
loss. 4 In the retail grocery trade, with stock turn varying between 
6 and 12 times a year, interest is still of some importance as an item 
of expense in determining profit or loss. 5 
In the retail meat trade the rate of stock turn is usually between 
50 and 100 times a year. Interest on investment is only about one- 
half of 1 per cent of the amount of annual sales (see Table 28), and 
of the investment but little more than 10 per cent is usually mer- 
chandise. (See Table 43.) In consequence, the effect of the rate of 
stock turn on the item of interest is hardly appreciable in total 
expense. Fresh beef is usually sold by the retailer about 15 days 
after the time of slaughter, except when slaughtered locally ; and it 
can be carried a longer period under suitable conditions of refriger- 
ation. Beef of the higher grades particularly is often held in the 
" ripening " process until 20 or 30 days from the time of slaughter. 
Cured meats, except for shrinkage by evaporation, can be carried a 
much longer time. 
A retail dealer with large refrigeration equipment for his fresh 
meats can easily carry a supply of combined cured and fresh meats 
in value the equivalent of two weeks of sales, which would mean a 
stock turn of 26 times a year. The interest expense of carrying 
such a supply would be approximately equivalent to one- fourth of 1 
per cent of net sales. If meats are selling at 15 to 20 cents a pound 
at wholesale, a saving of one-twentieth of 1 cent a pound on the 
purchase price would more than compensate for this loss of interest. 
Many dealers find the advantage of purchasing in large quantities 
sufficient to meet this interest expense, the cost of maintaining large 
refrigeration equipment, and the loss in deterioration and in shrink- 
age by evaporation. 
A rapid stock turn in the sense of prompt sale is clearly advan- 
tageous in so far as it avoids shrinkage and deterioration. Meats of 
low grade particularly should be sold promptly, and any holding 
until deterioration occurs is an economic loss to the community as 
well as a commercial loss to the dealer. In the matter of interest 
or investment, the expense of a slow stock turn in the meat trade is 
so small that it is often more than counterbalanced by the advantages 
of purchasing on a larger scale. To the small dealer this may mean 
merely purchasing in sides instead of in cuts; to the large dealer it 
may mean taking advantage of favorable market conditions. 
3 " The principal difference (in average cost of doing business in the retail jewelry 
trade) appeared in the item of total interest expense, which was 8.4 per cent of net mer- 
chandise sales for firms that turned their stock less than 0.7 time, as compared with 3.9 
per cent for firms that turned their stock one or more times in 1922. (Harvard Bureau 
of Business Research, Bull. No. 38, p. 51. 1923.) 
4 " The largest difference in expense (in the retail shoe trade) was in total interest, 
which was 4.4 per cent of net sales for the firms that turned their stock less than 1.4 
times in 1922, as compared with 2 per cent for firms turning their stock 2.2 times or 
more." (Harvard Bureau of Business Research, Bull. No. 36, p. 57. 1923.) 
5 See Harvard Bureau of Business Research, Bulletin No., 41, pp. 46, 47. (1924.) 
