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 Stevenson is
A)1.20.
B)1.00.
C)1.10.
D)1.33.

Question

Quizplus · Accepted Answer

The investment turnover is calculated by dividing sales by invested assets.

Investment Turnover = Sales / Invested Assets
Investment Turnover = $660,000 / $495,000
Investment Turnover = 1.33

Since the desired minimum rate of return is 15%, we also need to calculate the ROI (return on investment) to see if it meets or exceeds the desired rate.

ROI = Income from Operations / Invested Assets
ROI = $99,000 / $495,000
ROI = 0.20 or 20%

Since the ROI is higher than the desired minimum rate of return, the investment is considered successful. Therefore, the best choice is D (1.33).

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