Pendant Publishing reported the following results for its Textbook Division:

Pendant's target rate of return is 15% and the weighted average cost of capital is 10%.Its effective tax rate is 35%.
What is the Textbook Division's capital turnover?
A)2.2
B)2.5
C)5.0
D)2.0

Question

Pendant Publishing reported the following results for its Textbook Division:

Pendant's target rate of return is 15% and the weighted average cost of capital is 10%.Its effective tax rate is 35%.
What is the Textbook Division's capital turnover?
A)2.2 
B)2.5 
C)5.0 
D)2.0

Quizplus · Accepted Answer

D)
Capital turnover = Sales / Total assets
2.0 = 2,200,000 / 1,100,000

Pendant Publishing Reported the Following Results for Its Textbook Division