Assume the Air Conditioning Division of the General Appliance Corporation

question 9

Multiple Choice

Assume the Air Conditioning division of the General Appliance Corporation had the following results last year (in thousands) . Management's target rate of return is 15% and the weighted average cost of capital is 10%. Its effective tax rate is 35%. What is the division's capital turnover?

• A)5.00
• B)4.00
• C)1.25
• D)3.05

---

Definitions:

Assets

Economic resources owned or controlled by a company; they have measurable value and are expected to benefit the company by producing cash inflows or reducing cash outflows in the future.

Stock Price Appreciation

The rise in the value of a company's shares over time, reflecting the market's increased valuation of the company.

Common Stock

A form of corporate equity ownership, a type of security representing ownership of a fraction of a company, providing voting rights and a share in the company’s profits.

Return on Investment

A performance measure used to evaluate the efficiency or profitability of an investment or compare the efficiency of a number of different investments.