Asked by levana znaty on Jul 08, 2024
Verified
The ratio of sales to invested assets, which is also a factor in the DuPont formula for determining the return on investment (ROI) , is called
A) profit margin
B) indirect margin
C) investment turnover
D) cost ratio
Investment Turnover
A measure of a company's efficiency in using its assets to generate sales or revenue, calculated by dividing sales by the average total assets.
DuPont Formula
A method that breaks down the return on equity into three component parts—profit margin, asset turnover, and financial leverage—to analyze a company's financial performance.
Return on Investment
A financial metric used to evaluate the efficiency or profitability of an investment, calculated by dividing the profit from an investment by its cost.
- Compute and analyze the margin of profit and the turnover of investment.
Verified Answer
YS
Yousef SalehJul 12, 2024
Final Answer :
C
Explanation :
The ratio of sales to invested assets is known as investment turnover. It is a component of the DuPont formula that helps in analyzing the return on investment (ROI) by showing how effectively a company uses its assets to generate sales.
Learning Objectives
- Compute and analyze the margin of profit and the turnover of investment.