The Pasta Division of Whole Grain Corporation had sales of $5,500,000 and operating income of $1,375,000 last year.The total assets of the Pasta Division were $2,750,000,while current liabilities were $330,000.Whole Grain Corporation's target rate of return is 12%,while its weighted average cost of capital is 8%.The effective tax rate for the company is 30%.
What is the Pasta Division's sales margin?

Question

Quizplus · Accepted Answer

B)
Sales margin = Operating income/Sales
= 1,375,000/5,500,000 = 25%

The Pasta Division of Whole Grain Corporation Had Sales of $5,500,000