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 Industrial 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 Industrial Division, how much is the asset turnover?

Quizplus · Accepted Answer

Asset turnover is calculated as Sales Revenue / Average Assets. For the Industrial Division, this is \$1,040,000 / \$5,540,000 = 0.1877 or 18.8%.

Huntswell Corporation Has Two Major Divisions Agricultural Products and Industrial