Question

vSelected financial data for The Portland Porcelain Works Coffee Mug Division is as​ follows: Sales $ 2 comma 000 comma 000 Operating income $ 400 comma 000 Total assets $ 800 comma 000 Current liabilities $ 120 comma 000 Target rate of return 13​% Weighted average cost of capital 6​% What is The Portland Porcelain Works Coffee Mug Division capital​ turnover?

Answer 1

Answer:

Capital turnover = 2.5 times

Explanation:

given data

Sales =  $2,000,000

Operating income = $400,000

Total assets = $800,000

Current liabilities = $120,000

Target rate of return = 13​%

Weighted average cost of capital = 6​%

to find out

Portland Porcelain Works Coffee Mug Division capital​ turnover

solution

we get here Portland Porcelain Works Coffee Mug Division capital turnover that is find here by dividing sales by total assets

so

Capital turnover = $\frac{sales}{total\ assets}$     ......................1

put here value

Capital turnover = $\frac{2,000,000}{800,000}$

Capital turnover = 2.5 times