Ask Question
21 January, 15:06

Waldron inc. is considering selling to a group of new customers that will bring in credit sales of $24,000 with a return on sales of 5%. the only new investment will be in accounts receivable. waldron has a turnover ratio of 6 to 1 between sales and accounts receivable. what is waldron inc.'s expected return on investment?

+1
Answers (1)
  1. 21 January, 16:19
    0
    30%

    Explanation:

    The computation of return on investment is shown below:-

    Return on Sales = Credit sales * Return on sales

    = $24,000 * 5%

    = $1,200

    Investment in Accounts Receivable

    = $24,000 * 1 : 6

    = $4,000

    Return on Investment = Return on Sales : Investment in Accounts Receivable * 100

    = $1,200 : $4,000 * 100

    = 30%

    Therefore for computing the return on investment we simply divide the investment in account receivable by return on sales.
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “Waldron inc. is considering selling to a group of new customers that will bring in credit sales of $24,000 with a return on sales of 5%. ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers