Question

Assume the Electronics Division of ABC Electronics had the following data from last year: Net sales $100,000 Operating income $30,000 Average total assets 150,000 Management’s target rate of return 15% What is the division’s asset turnover ratio?

Answer 1

The division asset turnover ratio is 0.67

Step-by-step explanation:

The formula to computed the Division assets turnover ratio is as:

Division assets turnover ratio = Net Sales / Average Total Assets

where

Net sales is $100,000

Average total assets is $150,000

By putting the values into the formula, will compute the Division assets turnover ratio as:

= $100,000 / $150,000

= 0.67