Minar Inc. reported the following results from last year\'s operations: Sales Va

Question

Minar Inc. reported the following results from last year's operations: Sales Variable expenses Contribution margin Fixed expenses Net operating income Average operating assets $3,000,000 $5,700,000 3,510,000 2,190,000 1,734,000 456,000 At the beginning of this year, the company has a $900,000 investment opportunity with the following characteristics Sales Contribution margin ratio Fixed expenses $1,530,000 60% of sales 810,900 company will be If the company pursues the investment opportunity and otherwise performs the same as last year, the combined turnover for the entire closest to: 8.03

Explanation / Answer

Answer is 1.85

Explanation;

Formula of combined turnover is as follow;

Combined turnover = Combined Sales / Average operating assets

Combined sales ($5700000 + $1530000) = $7230000

Average operating assets ($3000000 + $900000) = $3900000

Thus combined turnover ($7230000 / $3900000) = 1.85

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