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25 October, 18:33

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?

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  1. 25 October, 21:38
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    The division asset turnover ratio is 0.67

    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
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