Assume the Apple division of the Gala Company had the following results last year (in thousands). Managements required rate of return is 10% and the weighted average cost of capital is 8%. Its effective tax rate is 30%.

- What is Apple division's capital turnover?
A) 11.11%
B) 16.67%
C) 66.67%
D) 60%

Question

Assume the Apple division of the Gala Company had the following results last year (in thousands) . Managements required rate of return is 10% and the weighted average cost of capital is 8%. Its effective tax rate is 30%.

- What is Apple division's capital turnover?

- What is Apple division's capital turnover?
A) 11.11% 
B) 16.67% 
C) 66.67% 
D) 60%

Quizplus · Accepted Answer

Capital turnover is calculated as sales divided by total capital. If Apple's division has sales of $200 million and total capital of $300 million, the capital turnover would be $200 million / $300 million = 0.6667 or 66.67%.

Assume the Apple Division of the Gala Company Had the Following