Turnover ratio is defined as:
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- $\dfrac{\text{Fixed capital investment}}{\text{Gross annual sales}}$
- $\dfrac{\text{Gross annual sales}}{\text{Fixed capital investment}}$
- $\dfrac{\text{Fixed capital investment}}{\text{Average selling price}}$
- $\dfrac{\text{Gross annual sales}}{\text{Average selling price}}$
The Correct Option is B
Solution and Explanation
Step 1: Formula.
Turnover ratio =
\[
\frac{\text{Gross annual sales}}{\text{Fixed capital investment}}
\]
Step 2: Interpretation.
This ratio shows how many rupees of sales are generated per rupee of fixed investment.
Step 3: Eliminating other options.
- Options (A) and (C) invert the ratio incorrectly.
- Option (D) compares sales to selling price, which is conceptually unrelated.
Thus, option (B) is correct.
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