The investment turnover is calculated as the ratio of sales to:
A) operating income.
B) invested assets.
C) marketable investments.
D) profit margin.

Question

Quizplus · Accepted Answer

The investment turnover ratio is calculated by dividing the sales by the average invested assets. This ratio measures the efficiency of the company in utilizing its assets to generate sales. Choice A is incorrect because operating income is not a relevant factor in calculating the investment turnover ratio. Choice C is incorrect because marketable investments are not necessarily the same as invested assets. Choice D is incorrect because profit margin is a measure of profitability, not asset utilization.

The Investment Turnover Is Calculated as the Ratio of Sales