Computations
Balance Sheet
The investment turnover ratio is computed by dividing the year to date net sales by the total net worth of the dealership. This is used to determine how many times the investment or net worth of the dealership is turned into net sales dollars. When the accounting period is less than twelve months, the computation should be annualized; if the ratio for a three-month period is 3 to 1, the annualized ratio would be 12 to 1.
Example:
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$19,500,000 |
|
|
/ |
|
|
Total Net Worth |
$1,500,000 |
|
Investment Turnover Ratio |
13 to 1 |