Huntswell Corporation has two major divisions Agricultural Products and Industrial Products. Data for the year just finished is as follows:
$\begin{array}{|l|r|r|}
\hline& \text { Agriculture Division } & \text { Industrial Division } \
\hline \text { Sales revenue } & \$ 140,000 & \$ 1,040,000 \
\hline \text { Operating income } & \$ 16,400 & \$ 220,000 \
\hline \text { Average assets } & \$ 300,000 & \$ 5,540,000 \
\hline \text { Target rate of return } & 4.0 \% & 4.0 \% \
\hline
\end{array}$
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For the Agricultural Division, how much is the asset turnover?

Question

Huntswell Corporation has two major divisions Agricultural Products and Industrial Products. Data for the year just finished is as follows:
$\begin{array}{|l|r|r|} 
\hline& \text { Agriculture Division } & \text { Industrial Division } \
\hline \text { Sales revenue } & \$ 140,000 & \$ 1,040,000 \
\hline \text { Operating income } & \$ 16,400 & \$ 220,000 \
\hline \text { Average assets } & \$ 300,000 & \$ 5,540,000 \
\hline \text { Target rate of return } & 4.0 \% & 4.0 \% \
\hline
\end{array}$
-
For the Agricultural Division, how much is the asset turnover?

Quizplus · Accepted Answer

Asset turnover is calculated as Sales Revenue / Average Assets. For the Agricultural Division, this is $140,000 / $300,000 = 0.467 or 46.7%.

Huntswell Corporation Has Two Major Divisions Agricultural Products and Industrial