Use the information below to answer the following question(s):
The Tandem division of the Great Adventures Cycles Company had the following results last year (in thousands).

Management's target rate of return is 10% and the weighted average cost of capital is 8%. Tandem's effective tax rate is 35%.
-What is the Tandem division's asset turnover?
A) 2.0
B) 4.2
C) 8.3
D) 13.3

Question

Use the information below to answer the following question(s):
The Tandem division of the Great Adventures Cycles Company had the following results last year (in thousands).
  
Management's target rate of return is 10% and the weighted average cost of capital is 8%. Tandem's effective tax rate is 35%.
-What is the Tandem division's asset turnover?
A) 2.0 
B) 4.2 
C) 8.3 
D) 13.3

Quizplus · Accepted Answer

Asset turnover is calculated by dividing sales by average assets. If the Tandem division's asset turnover is 2.0, it means that for every dollar of assets, the division generates $2.00 in sales.

Use the Information Below to Answer the Following Question(s)