Blancher Corporation had $495,000 in invested assets,sales of $660,000,income from operations amounting to $99,000,and a desired minimum rate of return of 15%.The investment turnover for Blancher is:
A)1.20.
B)1.00.
C)1.10.
D)1.33.

Question

Quizplus · Accepted Answer

The investment turnover is calculated as Sales / Average Invested Assets.
Average Invested Assets = (Beginning Invested Assets + Ending Invested Assets) / 2 = $495,000 (given)
Sales = $660,000 (given)
Investment Turnover = $660,000 / $495,000 = 1.33

Since Blancher's desired minimum rate of return is 15%, it is important to consider whether this investment turnover is generating enough income. However, the question does not provide any information about Blancher's profitability relative to the desired rate of return.

Blancher Corporation Had $495,000 in Invested Assets,sales of $660,000,income from Operations