The top management at Groundsource Company, a manufacturer of lawn and garden equipment, is attempting to recover from a fire that destroyed some of their accounting records. The main computer system was also severely damaged. The following information was salvaged: Tractor DivisionTiller DivisionDigger DivisionSales$10,000,000(a)$2,400,000Net operating income$1,200,000$1,440,000$ 600,000Operating assets(b)(c)$2,000,000Return on investment0.20.1(d)Return on sales(e)0.120.25Investment turnover(f)(g)1.2 What is the Tractor Division's investment turnover?

Ratio analysis is a method of measuring the financial position of the organization with different kinds of ratios such as liquidity ratio, profitability ratio, solvency ratio. These ratios help to compare two or more financial statements.Investment turnover ratio = Net sales / Total investment Net sales = 10,000,000 Return on investment = Net operating income / Total investment 0.2 = 1200,000 / Total investment Total investment = 1200,000 / 0.20 = 6,000,000 Investment turnover ratio = 10,000,000 / 600,000 = 1.667 or 1.7 timea

Answered: The top management at Groundsource…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Question

The top management at Groundsource Company, a manufacturer of lawn and garden equipment, is attempting to recover from a fire that destroyed some of their accounting records. The main computer system was also severely damaged. The following information was salvaged:

	Tractor Division	Tiller Division	Digger Division
Sales	$10,000,000	(a)	$2,400,000
Net operating income	$1,200,000	$1,440,000	$ 600,000
Operating assets	(b)	(c)	$2,000,000
Return on investment	0.2	0.1	(d)
Return on sales	(e)	0.12	0.25
Investment turnover	(f)	(g)	1.2

What is the Tractor Division's investment turnover?

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions