Question

Investment (Net Assets) Turnover Ratio can be calculated as ______?

Options

• Net Sales/Capital Employed

• Capital Employed/Net Sales

• Net Total sales/Average Accounts Receivable

• None of the above

Answer 1

Investment (Net Assets) Turnover Ratio can be calculated as Net Sales/Capital Employed.

Explanation:

It reflects the relationship of employees in the firm. Higher turnover results in improved liquidity and profitability. It is calculated as follows:

Investment (Net Assets) Turnover ratio = `"Net Sales"/"Capital Employed"`

Capital turnover which studies turnover of capital employed (Net Assets) is analyzed further by following two turnover ratios:

(1) Fixed Assets Turnover: It is computed follows:

Fixed asset turnover = `"Net Sales"/"Net Fixed Assets"`

(2) Working Capital Turnover: It is calculated as follows:

Working Capital Turnover = `"Net Sales"/"Working Capital"`