The Clydesdale Company has sales of $4,500,000. It also has invested assets of $2,000,000 and operating expenses of $3,600,000. The company has established a minimum rate of return of 7%. What is Clydesdale Company's investment turnover?
A) 1.80
B) 2.25
C) 1.25
D) 1.4

Question

Quizplus · Accepted Answer

Investment Turnover = Sales / Invested Assets
Investment Turnover = $4,500,000 / $2,000,000 
Investment Turnover = 2.25

Since the established minimum rate of return is 7%, we cannot determine if Clydesdale Company is meeting or exceeding its investment expectations solely based on the investment turnover ratio. We would need to calculate the return on investment (ROI) to determine if the company is meeting its expectations.

The Clydesdale Company Has Sales of $4,500,000