If an investment is $400 000,credit sales are $350 000 and cash sales are $200 000,the investment turnover ratio is:
A) 0.73 times.
B) 0.88 times.
C) 1.38 times.
D) 2 times.

Question

Quizplus · Accepted Answer

Investment Turnover ratio = (Net sales / average invested capital)
Net sales = Credit sales + Cash sales = $350,000 + $200,000 = $550,000
Average invested capital = $400,000 (given)

Investment Turnover ratio = $550,000 / $400,000 
Investment Turnover ratio = 1.38 times

Therefore, the correct answer is choice C.

If an Investment Is $400 000,credit Sales Are $350 000