Which of the following formulas is the investment turnover factor as used in determining the rate of return on investment?
A) Invested assets / Sales
B) Income from operations / Invested assets
C) Income from operations / Sales
D) Sales / Invested assets

Question

Quizplus · Accepted Answer

The investment turnover factor is the ratio of sales to invested assets. Therefore, the correct formula is Sales / Invested assets (Option D). Option A is incorrect because it is the formula for asset turnover ratio. Option B is incorrect as it implies income from operations is used as a measurement for the rate of return on investment, which is not true. Option C is incorrect as it is the formula for operating profit margin, which is not related to the rate of return on investment.

Which of the Following Formulas Is the Investment Turnover Factor