Asked by Aishah Khalea on May 05, 2024

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The ratio of sales to invested assets, which is also a factor in the DuPont formula for determining the return on investment, is called

A) profit margin
B) indirect margin
C) investment turnover
D) cost ratio

DuPont Formula

A method of performance measurement that breaks down return on equity into three component parts.

Investment Turnover

A measure of a company's efficiency in using its invested capital to generate revenues, often calculated as sales divided by the average invested capital.

Invested Assets

Assets that have been contributed or used by investors in the hope of generating future returns, often through interest, dividends, or appreciation in value.

  • Understand the components and calculations involved in the DuPont formula for ROI.
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PP
Prince PandeyMay 09, 2024
Final Answer :
C
Explanation :
The ratio of sales to invested assets is called investment turnover, as it measures how efficiently a company is using its assets to generate sales revenue. Profit margin is the ratio of net income to sales, while indirect margin and cost ratio are not commonly used financial ratios in the DuPont formula or in financial analysis in general.