A change in the investment turnover ratio from 2.3 times to 3.7 times will always mean,no matter what other factors change,that:
A)more sales are being generated relative to investment.
B)less sales are being generated relative to investment.
C)return on investment will be higher.
D)return on investment will be lower.

Question

Quizplus · Accepted Answer

An increase in the investment turnover ratio from 2.3 times to 3.7 times indicates that the company is generating more sales relative to its investment. This is because the investment turnover ratio is calculated by dividing the net sales by the average total assets, which means a higher turnover ratio implies that the company is generating more sales per dollar of investment. Therefore, the correct option is A.

A Change in the Investment Turnover Ratio from 2