The Perez Company had a 12.5% return on a $100,000 investment in new equipment. The investment resulted in increased sales, and the resultant increase in income amounted to 5% of sales. The turnover (asset utilization) was:

2.5

Explanation:

The Turnover (Asset Utilization) is calculated by dividing the business Turnover (Sales) by it's Assets.

We have the amount of assets (Investment). Now we have to calculate the Sales.

The Net Income was 12.5% of $100,000 so solving for that would be,

= 0.125 * 100,000

= $12,500

$12,500 was the Net Income.

It was said that the Net Income was 5% of sales so using algebra we have,

12,500= 0.05x

x = 12,500/0.05

= $250,000

With sales of $250,000 we can calculate the Turnover as,

Asset Turnover = Sales / Assets( Investment)

= 250,000/100,000

= 2.5

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Explanation: