Question

The Box Manufacturing Division of the Allied Paper Company reported the following results from the past year. Shareholders require a return of 4​%. Management calculated a weightedminusaverage cost of capital​ (WACC) of 3​%. ​Allied's corporate tax rate is 40​%.Sales$ 400 comma 000Operating income60 comma 000Total assets1 comma 100 comma 000Current liabilities900 comma 000What is the​ division's sales​ margin?

Answer 1

The​ division's sales​ margin is 15%

Step-by-step explanation:

In order to calculate the division's sales​ margin we would have to use the following formula:

sales margin=operating income/sales

operating income= $60,000

sales=$400,000

Therefore sales margin=$60,000/$400,000

sales margin=0.15

sales margin=15%

The​ division's sales​ margin is 15%