Stock Turnover Ratio:
The stock turnover ratio is a financial metric that measures how efficiently a company manages its inventory by assessing the number of times its inventory is sold and replaced over a specific period. It indicates how quickly a company is able to sell its inventory and generate sales.

Given Information:
- Sales: 400,000
- Average Stock: 40,000
- Profit Ratio: 10%

Calculating Stock Turnover Ratio:
The formula to calculate the stock turnover ratio is:

Stock Turnover Ratio = Cost of Goods Sold / Average Stock

To calculate the cost of goods sold (COGS), we can use the profit ratio. The profit ratio is the percentage of profit earned on sales. Therefore, we can calculate the COGS as follows:

Profit Ratio = (Profit / Sales) * 100

Profit = (Profit Ratio / 100) * Sales
Profit = (10 / 100) * 400,000
Profit = 40,000

COGS = Sales - Profit
COGS = 400,000 - 40,000
COGS = 360,000

Now, we can calculate the stock turnover ratio:

Stock Turnover Ratio = COGS / Average Stock
Stock Turnover Ratio = 360,000 / 40,000
Stock Turnover Ratio = 9

Interpretation:
The stock turnover ratio of 9 indicates that the company sells its entire inventory approximately 9 times during the given period. This implies that the company has efficient inventory management and is able to generate sales from its inventory multiple times.

Conclusion:
The stock turnover ratio is an important financial metric that helps assess a company's inventory management efficiency. In this case, the stock turnover ratio is calculated as 9, indicating that the company sells its inventory 9 times during the given period. This implies effective inventory management and the ability to generate sales.